Vodafone and Sunrise transactions remain on track to close
during the summer of 2019 and Q4 2019, respectively
Recently closed the sale of our DTH business in CEE for €180
million
Q1 2019 continuing operations operating income down 10% to
$106 million
Confirming all 2019 guidance targets
Liberty Global (NASDAQ: LBTYA, LBTYB and LBTYK):
Continuing Operations (Including
Switzerland)
Q1 2019
Net Adds 25,000 Revenue Growth1
(0.6)% OCF Growth1 (0.5)% Cash Flows
From: Operating Activities $306 mm Investing
Activities $(368) mm Financing Activities
$(738) mm OFCF Growth1 74% Adjusted
FCF $(625) mm P&E Additions $699 mm
Continuing Operations (Excluding Switzerland)2
Q1 2019 Net Adds 68,000
Revenue Growth1 (0.2)% OCF
Growth1 0.8% OFCF Growth1
162% Adjusted FCF3 $(622) mm P&E
Additions $640 mm 2019 Guidance
Targets4 (Excluding Switzerland)2 OCF
Growth1 Flat to Down Adjusted FCF3
$550 mm to $600 mm P&E Additions ~$2.7 bn
Liberty Global plc today announced its Q1 2019 financial
results. Our operations in Germany, Hungary, Romania and the Czech
Republic, along with our DTH business and our former operation in
Austria (collectively, the "Discontinued Operations") have been
accounted for as discontinued operations. UPC Switzerland will
continue to be included in our continuing operations until the
pending sale transaction is approved by Sunrise's shareholders.
Unless otherwise indicated, the information in this release relates
only to our continuing operations.
CEO Mike Fries stated, "A year ago we announced the sale
of our operations in Germany, Hungary, Romania and the Czech
Republic to Vodafone, which represents the largest divestiture in
company history. Since deal announcement we have crossed a number
of key milestones and the European Commission is currently in the
final stages of its review. We are confident that we remain on
track for a successful completion of this transaction during the
summer. With respect to the sale of UPC Switzerland to Sunrise, the
Swiss Competition Authority is now reviewing the case having
received formal notification and we anticipate regulatory approval
in the fourth quarter. And finally, we are pleased to announce that
the sale of our Eastern European DTH business was completed in
early May. We will provide updates in due course regarding our
capital allocation decisions with the total proceeds from these
transactions.
"From an operating perspective, Virgin Media continued to
deliver improved subscriber trends. During the first quarter,
Virgin Media delivered nearly 60,000 RGU additions, a 32%
year-over-year improvement driven by 26,000 new customer
relationships. On the innovation front, we are pushing the envelope
in the U.K. In April, we rolled out compelling new fixed-mobile
converged bundles, boosted our top broadband speed to 500 Mbps and
launched Intelligent WiFi, a cloud-based adaptive system that's
designed to significantly improve our customers' in-home WiFi
experience.
"Our Q1 ARPU performance at Virgin Media was impacted by lower
install and telephony usage revenue, the timing of certain PPV
events and increased promotions in response to market dynamics.
However, our competitive position remains strong and we continue to
extend our reach with Project Lightning, where we are building
400,000-500,000 new premises every year.
"In Switzerland, we are seeing emerging green shoots from our
multi-faceted turnaround plan. Our Horizon 4 set-top box rollout is
in full-swing with 130,000 boxes installed to date. Customer
reception has been very strong with NPS scores materially higher
than our legacy product. We also revamped our fixed-line bundles
and boosted our top broadband speed to 600 Mbps. On the mobile
front, we are beginning to harvest the benefits from our recent
MVNO switch as we added 13,000 subscribers in the quarter, which
represents our best Q1 ever.
"As forecasted, we continue to see substantial declines in
capital intensity with Q1 property and equipment additions lowered
by approximately 30% year-over-year. As a result, our operating
free cash flow performance nearly doubled from the prior-year
period.
"We will be hosting an earnings call tomorrow morning at 9:00
a.m. EDT to discuss our first quarter results. We hope you can join
us."
About Liberty Global
Liberty Global (NASDAQ: LBTYA, LBTYB and LBTYK) is the world’s
largest international TV and broadband company, with operations in
10 European countries under the consumer brands Virgin Media,
Unitymedia, Telenet and UPC. We invest in the infrastructure and
digital platforms that empower our customers to make the most of
the video, internet and communications revolution. Our substantial
scale and commitment to innovation enable us to develop
market-leading products delivered through next-generation networks
that connect 21 million customers subscribing to 45 million TV,
broadband internet and telephony services. We also serve 6 million
mobile subscribers.*
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.
* The figures included in this paragraph include both the
continuing and discontinued operations that we owned on March 31,
2019
Q1 Highlights (on a continuing
operations basis unless otherwise noted)
- Q1 rebased revenue decreased 0.6%
- Q1 residential cable revenue5 decreased
1.1% year-over-year to $1.9 billion
- Results driven by revenue contractions
in Switzerland and Belgium
- Q1 residential mobile revenue5
decreased 2.4% year-over-year to $0.4 billion
- Strong Swiss results offset by weakness
in all other operations
- Q1 B2B6 revenue5 increased 3.2%
year-over-year to $0.5 billion
- Q1 growth in all markets led by
performance in Belgium and U.K./Ireland
- Q1 operating income decreased 10.3%
year-over-year to $105.5 million
- Q1 rebased OCF declined by 0.5% to
$1,183.3 million
- Strong results at Telenet were more
than offset by softness at UPC Switzerland and Virgin Media
- Q1 property & equipment additions
spend down approximately 30% year-over-year
- Built 131,000 new premises in Q1
- Virgin Media delivered 102,000 new
premises in the U.K. & Ireland
- Completed the sale of our DTH business
for €180 million ($202 million) in early May
- Repurchased over $200 million of stock
in Q1 2019
- Solid balance sheet with $3.4 billion
of liquidity7
- Net leverage8 of 5.3x for the Full
Company
- Fully-swapped borrowing cost of
4.3%
Liberty Global (continuing
operations)
Q1 2019
YoYGrowth(i)
Subscribers
Organic RGU Net Additions 24,700 Organic RGU Net Additions
excluding Switzerland 67,600
Financial (in USD
millions)
Revenue Continuing operations $ 2,868.0 (0.6 %) Continuing
operations excluding Switzerland (0.2 %) Operating income $ 105.5
(10.3 %) OCF: Continuing operations $ 1,183.3 (0.5 %) Continuing
operations excluding Switzerland 0.8 % Cash provided by
operating activities $ 306.3 Cash used by investing activities $
(367.7 ) Cash used by financing activities $ (737.5 ) Adjusted FCF:
Continuing operations $ (624.5 ) Pro forma continuing
operations(ii) $ (622.1 )
(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 remaining Discontinued
Operations and the Switzerland Disposal Group2. For additional
details, see the information and reconciliation included within the
Glossary
Subscriber Growth
Three months ended March 31,
2019 2018 Organic RGU net
additions (losses) by product Video (60,500 ) (45,200 ) Data
42,400 30,500 Voice 42,800 4,400 Total 24,700
(10,300 )
Organic RGU net additions (losses) by
market U.K./Ireland 59,200 44,900 Belgium (35,700 ) (25,200 )
Switzerland (42,900 ) (43,700 ) Continuing CEE (Poland and
Slovakia) 44,100 13,700 Total 24,700 (10,300 )
Organic Mobile SIM additions (losses) by product
Postpaid 72,300 113,100 Prepaid (45,500 ) (49,400 ) Total 26,800
63,700
Organic Mobile SIM additions
(losses) by market U.K./Ireland (6,700 ) 25,200 Belgium9 20,900
31,800 Other 12,600 6,700 Total 26,800 63,700
- Cable Product
Performance: During Q1 we added 25,000 RGUs, as compared to
a loss of 10,000 RGUs in the prior-year period, as an improved
performance in our CEE operations, at Virgin Media and in
Switzerland was partially offset by weakness in Belgium. From a
product perspective, voice and data adds showed a year-over-year
increase, while video losses accelerated year-over-year
- U.K./Ireland: Q1 RGU additions of 59,000
represents a 32% increase over the prior-year period, driven by
success in our Project Lightning footprint
- Belgium:
RGU attrition of 36,000 in Q1 was primarily due to intensified
competition
- Switzerland: Lost 43,000 RGUs in Q1, compared to a
loss of 44,000 in Q1 2018, primarily due to continued intense
competition
- Continuing CEE
(Poland and Slovakia): Gained 44,000 RGUs in Q1, as compared
to 14,000 added in the prior-year period, driven by stronger
broadband, voice and video adds in Poland
- Mobile:
Added 27,000 mobile subscribers in Q1, as 72,000 postpaid additions
were only partially offset by continued attrition in our low-ARPU
prepaid base
- Q1 U.K./Ireland postpaid mobile net
additions of 26,000 were offset by low-ARPU prepaid losses,
resulting in a net loss of 7,000 mobile subscriptions; 4G
subscriptions now represent 81% of our postpaid base
- Belgium added 21,000 mobile subscribers
during Q1
- Switzerland added 13,000 mobile
subscribers in Q1, driven by bundling success and a revamped mobile
offer following our MVNO switch to Swisscom's network
Revenue Highlights
The following table presents (i) revenue of each of our
consolidated reportable segments for the comparative periods and
(ii) the percentage change from period to period on both a reported
and rebased basis:
Three months ended
March 31,
Increase/(decrease)
Revenue 2019 2018
%
Rebased % in millions, except % amounts
Continuing operations: U.K./Ireland $ 1,661.3 $
1,778.2 (6.6 ) (0.1 ) Belgium 711.9 759.6 (6.3 ) (0.6 ) Switzerland
316.0 344.9 (8.4 ) (3.7 ) Continuing CEE 119.1 129.5 (8.0 ) 2.2
Central and Corporate 60.7 52.7 15.2 (1.1 ) Intersegment
eliminations (1.0 ) (1.4 ) N.M. N.M. Total continuing
operations $ 2,868.0 $ 3,063.5 (6.4 ) (0.6 )
Total continuing operations excluding Switzerland (0.2 )
Discontinued Operations(i): Germany $ 699.2 $
782.8 (10.7 ) (3.3 ) Austria — 109.7 (100.0 ) — Discontinued CEE
188.4 201.3 (6.4 ) 2.9 Intersegment eliminations (1.2 ) (1.2 ) N.M.
N.M. Total Discontinued Operations $ 886.4 $
1,092.6 (18.9 ) (2.1 ) ______________________________ N.M. -
Not Meaningful (i) For information concerning our
discontinued operations, see note 2.
- Reported revenue for the three months
ended March 31, 2019 decreased 6.4% year-over-year
- The Q1 results were 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% during
Q1. This result included the favorable impact of a $4.1 million
revenue reversal recorded during the first quarter of 2018
Q1 2019 Rebased Revenue Growth - Segment
Highlights
- U.K./Ireland: Rebased revenue decrease of 0.1% in
Q1 driven by the net effect of (i) a decrease in residential mobile
revenue driven by lower volume of handset sales offsetting the
revenue benefit of an increase in mobile subscribers in Ireland,
(ii) an increase in residential cable revenue due to higher
subscription revenue driven by increased subscriber growth and
(iii) higher B2B revenue due to an increase in internet SOHO
subscribers
- Belgium:
Rebased revenue decline of 0.6% in Q1 driven by the net effect of
(i) an increase in B2B revenue due to an increase in SOHO
subscribers, (ii) a decrease in residential cable revenue due to
decreases in cable non-subscription revenue from lower sales of
equipment and cable sub revenue due to lower subscribers and (iii)
a decrease in residential mobile revenue due to a decrease in
mobile ARPU
- Switzerland: Rebased revenue declined 3.7% in Q1,
primarily due to the net effect of (i) a decrease in lower
residential cable subscription revenue, which was primarily driven
by lower average subscriber levels, (ii) an increase in mobile
revenue and (iii) higher B2B revenue
- Continuing CEE
(Poland and Slovakia): Rebased revenue increased 2.2% in Q1
driven by (i) growth in our B2B business and (ii) an increase in
residential cable subscription revenue driven by new build
areas
- Central and
Corporate: Rebased revenue decreased 1.1% in Q1 due largely
to lower-margin sales of customer premises equipment to the
VodafoneZiggo JV, which began in the second quarter of 2018
Operating Income
- Operating income was $105.5 million and
$117.6 million in Q1 2019 and Q1 2018, respectively, representing a
decrease of 10.3% year-over-year.
- The decrease in operating income
resulted from the net effect of (i) a decrease in depreciation and
amortization expense, (ii) lower OCF, as further described below,
(iii) an increase in share-based compensation expense and (iv) an
increase in 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
March 31,
Increase/(decrease)
OCF 2019 2018
%
Rebased % in millions, except % amounts
Continuing operations: U.K./Ireland $ 708.3 $ 762.6
(7.1 ) (0.7 ) Belgium 339.0 357.6 (5.2 ) 2.2 Switzerland 163.1
186.5 (12.5 ) (7.4 ) Continuing CEE 57.2 62.3 (8.2 ) 2.0 Central
and Corporate (85.7 ) (107.1 ) 20.0 4.2 Intersegment eliminations
1.4 (0.2 ) N.M. N.M. Total continuing
operations $ 1,183.3 $ 1,261.7 (6.2 ) (0.5 )
Total continuing operations excluding Switzerland 0.8
Discontinued Operations(i): Germany $ 438.5 $
492.1 (10.9 ) (3.5 ) Austria — 58.8 (100.0 ) — Discontinued CEE
70.8 76.8 (7.8 ) 1.3 Intersegment eliminations 7.6 9.5
N.M. N.M. Total Discontinued Operations $
516.9 $ 637.2 (18.9 ) (2.6 )
______________________________ N.M. - Not Meaningful
(i)
For information concerning our discontinued operations, see
note 2.
- Reported OCF for the three months ended
March 31, 2019 decreased 6.2% year-over-year
- This result was primarily driven by the
aforementioned revenue decline
- Rebased OCF decline of 0.5% in Q1
included:
- Unfavorable network tax increase of
$5.5 million following an increase in the rateable value of our
existing U.K. networks, which is being phased in over a six-year
period ending in 2022
- The aforementioned favorable impact of
a revenue reversal recorded in Switzerland during the first quarter
of 2018
- As compared to the prior-year period,
our Q1 2019 OCF margin was up 10 basis points to 41.3%
Q1 2019 Rebased Operating Cash Flow Growth
- Segment Highlights
- U.K./Ireland: Rebased OCF contraction of 0.7% was
primarily attributable to the aforementioned revenue performance,
increased programming costs and higher network taxes
- Belgium:
Rebased OCF growth of 2.2%, largely driven by lower direct costs as
a result of the migration of subscribers to our own mobile
network
- Switzerland: Rebased OCF decline of 7.4% in Q1,
largely due to the aforementioned loss of residential cable
subscription revenue
- Continuing CEE
(Poland and Slovakia): Rebased OCF growth of 2.0% largely
driven by the aforementioned revenue trend
Net Earnings (Loss) Attributable to Liberty Global
Shareholders
- Net earnings (loss) attributable to
Liberty Global shareholders was $7.0 million and ($1,186.5 million)
for the three months ended March 31, 2019 and 2018,
respectively.
Leverage and Liquidity
- Total principal
amount of debt and finance leases: $30.2 billion for
continuing operations
- Leverage
ratios8: At March 31, 2019, our adjusted gross and net
leverage ratios for the Full Company were 5.4x and 5.3x,
respectively.
- Average debt
tenor10: Approximately 7 years, with ~71% not due until 2025
or thereafter for continuing operations
- Borrowing
costs: Blended fully-swapped borrowing cost of our debt was
4.3% for continuing operations
- Liquidity7: $3.4 billion for our continuing
operations, including (i) $0.9 billion of cash at March 31,
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;
the anticipated regulatory approvals, closings and impacts of each
of the Vodafone and Sunrise transactions; the expected use of
proceeds of our disposal transactions; decisions regarding our
capital allocation; expectation with respect to Project Lightning;
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 Form 10-Q. Further,
estimated cash proceeds from pending dispositions are inherently
uncertain and represent management’s expectations and beliefs and
do not take into account the ultimate use of the proceeds or any
other changes in our capital structure or tax effects, directly or
indirectly related to the pending dispositions. 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 and OCF for the three months ended
March 31, 2018 to (i) include the pre-acquisition revenue and OCF
of entities acquired during 2018 in our rebased amounts for the
three months ended March 31, 2018 to the same extent that the
revenue and OCF of these entities are included in our results for
the three months ended March 31, 2019, (ii) exclude the revenue and
OCF of UPC Austria to the same extent that the revenue and OCF of
UPC Austria is excluded from our results for the three months ended
March 31, 2019, and to exclude the revenue and OCF of entities
disposed of during 2018, (iii) include revenue and costs for the
temporary elements of transitional and other services provided to
the VodafoneZiggo JV, Deutsche Telekom (the buyer of UPC Austria)
and Liberty Latin America, to reflect amounts related to these
services equal to those included in our results for the three
months ended March 31, 2019 and (iv) reflect the translation of our
rebased amounts for the three months ended March 31, 2018 at the
applicable average foreign currency exchange rates that were used
to translate our results for the three months ended March, 2019. We
have reflected the revenue and OCF 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 and OCF
of these entities on a basis that is comparable to the
corresponding post-acquisition amounts that are included in our
historical results or that the pre-acquisition financial statements
we have relied upon do not contain undetected errors. The
adjustments reflected in our rebased amounts have not been prepared
with a view towards complying with Article 11 of Regulation S-X. In
addition, the rebased growth percentages are not necessarily
indicative of the revenue and OCF that would have occurred if these
transactions had occurred on the dates assumed for purposes of
calculating our rebased amounts or the revenue and OCF that will
occur in the future. The rebased growth percentages have been
presented as a basis for assessing growth rates on a comparable
basis, and are not presented as a measure of our pro forma
financial performance.
The following table provides adjustments made to the 2018
amounts to derive our rebased growth rates:
Three months ended March 31,
2018 Revenue OCF in millions
Continuing operations: Acquisitions $ 16.3 $ 1.6 Dispositions(i)
12.6 9.8 Foreign Currency (208.5 ) (83.9 ) Total decrease $ (179.6
) $ (72.5 ) Discontinued Operations: Dispositions (101.3 )
(54.3 ) Foreign Currency (86.3 ) (51.9 ) Total decrease $ (187.6 )
$ (106.2 )
(i)
Includes rebase adjustments related to agreements to provide
transitional and other services to the VodafoneZiggo JV, Liberty
Latin America and UPC Austria. 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 and OCF of $12.6
million and $11.2 million, respectively, for the three months ended
March 31, 2018.
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 March 31, 2019:
Finance Debt
& Finance Cash Lease
Lease and Cash Debt(ii), (iii)
Obligations Obligations Equivalents in
millions Liberty Global and unrestricted subsidiaries $ 1,605.8
$ 45.2 $ 1,651.0 $ 824.5 Virgin Media(iv) 16,000.2 68.5 16,068.7
35.7 UPC Holding 5,970.6 53.9 6,024.5 26.3 Telenet 5,957.6
463.9 6,421.5 52.9 Total $ 29,534.2 $ 631.5
$ 30,165.7 $ 939.4 ______________________________ (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 are not a direct obligation of the entities to be
disposed within the UPC Holding borrowing group. Certain of these
obligations have been repaid with portions of the proceeds from the
disposition of UPC Austria. (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 for the indicated periods and reconcile those
additions to the capital expenditures that are presented in the
condensed consolidated statements of cash flows in our 10-Q.
Three months ended March 31, 2019
2018 2019
2018 Continuing operations Discontinued
Operations in millions, except % amounts Customer
premises equipment $ 228.6 $ 295.7 $ 124.0 $ 80.7 New Build &
Upgrade 142.4 188.0 29.3 74.9 Capacity 72.6 126.5 25.7 26.3 Product
& Enablers 126.6 207.8 14.8 28.6 Baseline 128.4 165.6
33.6 57.3 Total P&E Additions 698.6 983.6 $ 227.4
$ 267.8 Reconciliation of P&E Additions to capital
expenditures: Assets acquired under capital-related vendor
financing arrangements(i) (508.9 ) (635.9 ) Assets acquired under
finance leases (12.2 ) (23.9 ) Changes in current liabilities
related to capital expenditures 153.8 160.4 Total
capital expenditures, net(ii) $ 331.3 $ 484.2
Capital expenditures, net: Third-party payments $ 371.6 $ 509.6
Proceeds received for transfers to related parties(iii) (40.3 )
(25.4 ) Total capital expenditures, net $ 331.3 $ 484.2
P&E Additions as % of revenue 24.4 % 32.1 %
______________________________ (i) Amounts exclude related
VAT of $84.8 million and $96.6 million during the three months
ended March 31, 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 March 31,
%
Rebased 2019 2018
Change % Change Liberty Global $ 60.20 $ 63.97
(5.9 %) 0.9 % U.K. & Ireland (Virgin Media) £ 51.36 £ 51.58
(0.4 %) (0.3 %) Belgium (Telenet) € 57.27 € 54.90 4.3 % 4.4 % UPC €
37.01 € 36.81 0.5 % (0.5 %)
Mobile ARPU
The following tables provide ARPU per mobile subscriber for the
indicated periods:
ARPU per Mobile Subscriber Three months
ended March 31, %
Rebased 2019 2018 Change
% Change Liberty Global: Including interconnect
revenue $ 16.27 $ 15.51 4.9 % (1.2 %) Excluding interconnect
revenue $ 13.97 $ 12.83 8.9 % (1.6 %)
Consolidated Operating Data — March 31, 2019
Video
HomesPassed
Two-wayHomesPassed
CableCustomerRelationships
BasicVideoSubscribers(i)
EnhancedVideoSubscribers
DTHSubscribers
TotalVideo
InternetSubscribers(ii)
TelephonySubscribers(iii)
TotalRGUs
TotalMobileSubscribers(iv)
Continuing operations: U.K. 14,510,700 14,504,000
5,534,200 — 3,846,700 — 3,846,700 5,259,600 4,617,300 13,723,600
3,030,600 Belgium 3,357,100 3,357,100 2,099,800 191,400 1,725,400 —
1,916,800 1,658,100 1,243,200 4,818,100 2,704,800 Switzerland(v)
2,344,400 2,344,400 1,092,200 427,600 632,600 — 1,060,200 686,200
513,600 2,260,000 159,100 Ireland 929,800 897,600 437,700 2,900
269,200 — 272,100 378,100 352,300 1,002,500 86,100 Poland 3,479,400
3,425,000 1,462,800 177,900 1,053,800 — 1,231,700 1,192,300 668,000
3,092,000 2,800 Slovakia 615,100 600,300
194,700 27,300 144,000
— 171,300 138,500
86,100 395,900 —
Total continuing
operations 25,236,500 25,128,400
10,821,400 827,100
7,671,700 —
8,498,800 9,312,800
7,480,500 25,292,100
5,983,400 Discontinued Operations:
Germany 13,152,000 13,075,700 7,179,100 4,692,900 1,574,700 —
6,267,600 3,638,300 3,396,700 13,302,600 273,300 Romania 3,162,700
3,126,800 961,700 205,900 708,400 — 914,300 594,200 581,100
2,089,600 — Hungary 1,833,600 1,816,100 865,500 62,900 628,300 —
691,200 700,400 686,400 2,078,000 115,800 Czech Republic 1,550,900
1,531,100 613,600 172,500 366,500 — 539,000 506,100 202,700
1,247,800 — DTH — — 756,800
— — 756,800
756,800 11,400 11,400
779,600 —
Total Discontinued Operations
19,699,200 19,549,700
10,376,700 5,134,200
3,277,900 756,800
9,168,900 5,450,400
4,878,300 19,497,600
389,100 Subscriber Variance Table -
March 31, 2019 vs. December 31, 2018
Video
HomesPassed
Two-wayHomesPassed
CableCustomerRelationships
BasicVideoSubscribers(i)
EnhancedVideoSubscribers
DTHSubscribers
TotalVideo
InternetSubscribers(ii)
TelephonySubscribers(iii)
TotalRGUs
TotalMobileSubscribers(iv)
Continuing operations: U.K. 93,400 93,700 24,800 —
(25,300 ) — (25,300 ) 35,000 46,100 55,800 (8,900 ) Belgium 6,400
6,400 (15,200 ) (9,800 ) (13,300 ) — (23,100 ) 300 (12,900 )
(35,700 ) 20,900 Switzerland(v) 6,200 6,200 (23,600 ) (9,600 )
(13,200 ) — (22,800 ) (14,100 ) (6,000 ) (42,900 ) 12,800 Ireland
6,800 7,100 500 (1,600 ) 2,600 — 1,000 2,400 — 3,400 4,600 Poland
15,600 16,100 15,000 (2,600 ) 11,100 — 8,500 17,100 13,700 39,300
(400 ) Slovakia 1,200 1,200 600
(400 ) 1,700 — 1,300
1,700 1,700 4,700
—
Total continuing operations 129,600
130,700 2,100
(24,000 ) (36,400 )
— (60,400 ) 42,400
42,600 24,600
29,000 Discontinued Operations:
Germany 15,800 15,500 3,200 17,400 (32,800 ) — (15,400 ) 22,800
15,900 23,300 (10,000 ) Romania 8,900 8,800 (4,200 ) (16,100 )
9,800 — (6,300 ) 1,800 7,800 3,300 — Hungary 5,600 5,500 2,600
(5,400 ) 4,700 — (700 ) 6,000 9,300 14,600 5,900 Czech Republic
1,800 1,800 (2,800 ) 2,200 (2,700 ) — (500 ) — 8,700 8,200 — DTH —
— (24,000 ) — —
(24,000 ) (24,000 ) 200
200 (23,600 ) —
Total Discontinued
Operations 32,100 31,600
(25,200 ) (1,900 )
(21,000 ) (24,000 )
(46,900 ) 30,800
41,900 25,800 (4,100
) Subscriber Variance Table - March
31, 2019 vs. December 31, 2018
Video
HomesPassed
Two-wayHomesPassed
CableCustomerRelationships
BasicVideoSubscribers(i)
EnhancedVideoSubscribers
TotalVideo
InternetSubscribers(ii)
TelephonySubscribers(iii)
TotalRGUs
TotalMobileSubscribers(iv)
Organic Change
Summary:
U.K. 93,400 93,700 25,000 — (25,300 ) (25,300 ) 35,000 46,100
55,800 (11,300 ) Belgium 6,400 6,400 (15,200 ) (9,800 ) (13,300 )
(23,100 ) 300 (12,900 ) (35,700 ) 20,900 Other Europe 29,800
30,600 (11,500 ) (14,100 ) 2,000
(12,100 ) 7,100 9,600
4,600 17,200 Total Organic Change 129,600
130,700 (1,700 ) (23,900 )
(36,600 ) (60,500 ) 42,400
42,800 24,700 26,800
Q1 2019
Adjustments:
Q1 2019 Adjustment - U.K. — — (200 ) — — — — — — 2,400 Q1 2019
Adjustment - Poland — — 4,000
(100 ) 200 100 —
(200 ) (100 ) (200 )
Net Adds (Reductions) —
— 3,800 (100 ) 200
100 — (200 ) (100
) 2,200
Footnotes for Consolidated Operating
Data and Subscriber Variance Tables
(i) We have approximately 197,400 “lifeline”
customers that are counted on a per connection basis, representing
the least expensive regulated tier of video cable service, with
only a few channels. (ii) 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 74,400 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 157,500 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, 2019, our mobile subscriber count included 476,700 and 343,800
prepaid mobile subscribers in Belgium and the U.K., respectively.
(v) Pursuant to service agreements, Switzerland offers enhanced
video, broadband internet and telephony services over networks
owned by third-party cable operators (“partner networks”). A
partner network RGU is only recognized if there is a direct billing
relationship with the customer. At March 31, 2019, Switzerland’s
partner networks account for 124,100 Cable Customer Relationships,
296,400 RGUs, which include 105,600 Enhanced Video Subscribers,
108,200 Internet Subscribers, and 82,600 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 Germany, homes passed reflect the footprint and two-way homes
passed reflect the technological capability of our network up to
the street cabinet, with drops from the street cabinet to the
building generally added, and in-home wiring generally upgraded, on
an as needed or success-based basis. In Belgium, Telenet leases a
portion of its network under a long-term 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 With the exception of OFCF, 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. OFCF growth
rates are presented on a reported basis. 2 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. This is the basis on which analyst
consensus estimates for our key performance indicators are
currently derived and on which we originally provided our 2019
guidance for OCF, Adjusted FCF and Property and Equipment
Additions. For the 2019 period, our Discontinued Operations include
Germany, Hungary, Romania, the Czech Republic and our DTH business.
For the 2018 period, our Discontinued Operations also include our
former operations in Austria through July 31, 2018. 3 Pro forma
Adjusted FCF incorporates our preliminary estimate of (a) assumed
interest and related derivative payments that were made by the UPC
Holding continuing operations during the period and (b) the net
cash flows that we would have received from transitional services
agreements if the sale of the remaining Discontinued Operations and
UPC Switzerland had occurred on January 1, 2019. A reconciliation
of our Adjusted FCF guidance for 2019 to a U.S. GAAP measure is not
provided as 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. 4 Absolute full-year 2019
U.S. dollar guidance figures based on FX rates of EUR/USD 1.13 and
GBP/USD 1.30 5 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. 6 Total B2B includes subscription
(SOHO) and non-subscription revenue. B2B and SOHO growth rates
include upsell from our residential businesses. 7 Liquidity refers
to cash and cash equivalents plus the maximum undrawn commitments
under subsidiary borrowing facilities, without regard to covenant
compliance calculations.
8
Consistent with how we calculate our leverage ratios under our debt
agreements, we calculate our debt ratios on a Full Company basis,
which includes our continuing operations and our remaining
Discontinued Operations, with the gross and net debt ratios 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. We have not
presented leverage ratios on a continuing operations basis as we
believe that such a presentation would overstate our leverage and
would not be representative of the actual leverage ratios that we
will report once all dispositions are completed. For additional
information, see note 4 to the condensed consolidated financial
statements included in our 10-Q. The following table details the
calculation of our Full Company consolidated debt and net debt to
annualized consolidated OCF ratios as of and for the quarter ended
March 31, 2019:
As of and for thequarter
endedMarch 31, 2019
in millions, except ratios Consolidated Debt to
Annualized Consolidated OCF: Debt and finance lease obligations
before deferred financing costs, discounts and premiums $ 40,023.6
Principal related projected derivative cash payments (1,508.1 ) ITV
Collar Loan (1,406.4 ) Lionsgate Collar Loan (82.9 ) Adjusted debt
and finance lease obligations before deferred financing costs,
discounts and premiums $ 37,026.2 Annualized
quarterly OCF $ 6,800.8 Consolidated debt to annualized
consolidated OCF ratio 5.4
Consolidated Net Debt to
Annualized Consolidated OCF: Adjusted debt and finance lease
obligations before deferred financing costs, discounts and premiums
$ 37,026.2 Cash and cash equivalents (951.1 ) Adjusted net debt and
finance lease obligations before deferred financing costs,
discounts and premiums $ 36,075.1 Annualized
quarterly OCF $ 6,800.8 Consolidated net debt to annualized
consolidated OCF ratio 5.3 9 Our Q1 2018 mobile subscriber
additions have been restated to correct the overstatement of our
and Telenet's subscriber base in relation to (i) the removal of
inactive "pay as you go subscribers" within Telenet's postpaid
subscriber base as these subscribers do not pay a monthly
subscription fee and are only billed on their effective usage and
(ii) the removal of small or medium enterprise mobile telephony
subscribers that are now considered business customers and are no
longer included in our mobile telephony subscriber count. These
adjustments resulted in reductions to our mobile subscriber base of
49,400 and 127,300, respectively, at March 31, 2018 and 53,000 and
133,200, respectively, at December 31, 2017. 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 March 31, 2019 compliance reporting requirements for our
credit facilities, and assuming no further changes from quarter-end
borrowing levels, we anticipate that the borrowing capacity of our
continuing operations will continue to be $2.5 billion.
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 the changes to our Adjusted
Free Cash Flow that we expect will occur following the sale of the
remaining Discontinued Operations and the Switzerland Disposal
Group, we also present Adjusted Free Cash Flow on a pro forma basis
for three months ended March 31, 2019 as if the sale of the
remaining Discontinued Operations and the Switzerland Disposal
Group had been completed on January 1, 2019.
Three months ended March 31, 2019
2018 2019
2018 Continuing operations Discontinued
Operations (i) in millions Net cash
provided by operating activities $ 306.3 $ 670.3 $ 459.1 $ 609.0
Cash payments for direct acquisition and disposition costs 12.4 1.6
— — Expenses financed by an intermediary(ii) 564.0 507.3 138.8 50.5
Capital expenditures, net (331.3 ) (484.2 ) (110.6 ) (161.8 )
Principal payments on amounts financed by vendors and
intermediaries (1,162.8 ) (1,675.9 ) (209.6 ) (120.9 ) Principal
payments on certain finance leases (13.1 ) (18.0 ) (2.7 ) (3.0 )
Adjusted FCF (624.5 ) $ (998.9 ) $ 275.0 $ 373.8
Pro forma adjustments related to the sale of the remaining
Discontinued Operations and the Switzerland Disposal Group: Sale of
the Switzerland Disposal Group(iii) (40.9 ) Interest and derivative
payments(iv) (21.5 ) Transitional services agreements(v) 64.8
Pro forma Adjusted FCF(vi) $ (622.1 ) _______________ (i)
For the 2019 period, our Discontinued Operations include
Germany, Hungary, Romania and the Czech Republic and our DTH
business. For the 2018 period, our Discontinued Operations also
include our former operation in Austria through July 31, 2018.
(ii) For purposes of our condensed consolidated statements
of cash flows, expenses financed by an intermediary are treated as
hypothetical operating cash outflows and hypothetical financing
cash inflows when the expenses are incurred. When we pay the
financing intermediary, we record financing cash outflows in our
condensed consolidated statements of cash flows. For purposes of
our Adjusted Free Cash Flow definition, we add back the
hypothetical operating cash outflow when these financed expenses
are incurred and deduct the financing cash outflows when we pay the
financing intermediary. (iii) The Switzerland Disposal Group
is included within our Continuing Operations Adjusted FCF. In
connection with the pending disposition, Sunrise will acquire the
Switzerland Disposal Group, the UPC Notes, associated derivatives
and certain other debt items. As a result, this pro forma
adjustment represents the Adjusted FCF of the Switzerland Disposal
Group, including 100% of the interest and related derivative
payments made during the applicable period related to the UPC
Notes. (iv) Represents the estimated interest and related
derivative payments that have been made by UPC Holding in relation
to the 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 are
required with respect to Unitymedia's interest and derivative
payments as substantially all of Unitymedia’s debt and related
derivative instruments are 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.
(v) Represents our preliminary estimate of the net cash
flows that we would have received from transitional services
agreements if the sale of the remaining 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 remaining Discontinued Operations and Switzerland Disposal
Group, less the estimated incremental costs that we expect to incur
to provide such transitional services. As a result, this pro forma
adjustment includes $39.7 million related to our discontinued
operations in Germany, Hungary, Romania and the Czech Republic,
$24.4 million related to the Switzerland Disposal Group and $0.7
million related to our discontinued DTH business. (vi)
Represents the Adjusted FCF that we estimate would have resulted if
the sale of the remaining 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 is
presented in the following table:
Three months ended March 31, 2019
2018
Continuingoperations
DiscontinuedOperations
Continuingoperations
DiscontinuedOperations
in millions Operating income $ 105.5 $ 504.1 $ 117.6
$ 375.5 Share-based compensation expense 67.3 3.5 42.7 3.1
Depreciation and amortization 939.6 — 1,040.7 255.7 Impairment,
restructuring and other operating items, net 70.9 9.3
60.7 2.9 Total OCF $ 1,183.3 $ 516.9 $ 1,261.7
$ 637.2
OCF margin: calculated by dividing
OCF by total revenue for the applicable period.
OFCF: As used herein, 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.
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.
Two-way Homes Passed: homes passed
by those sections of our networks that are technologically capable
of providing two-way services, including video, internet and
telephony services.
U.S. GAAP: United States Generally
Accepted Accounting Principles.
YoY: Year-over-year.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190506005758/en/
Investor RelationsMatt Coates, +44 20 8483 6333John Rea, +1 303
220 4238Stefan Halters, +44 20 8483 6211Corporate
CommunicationsMolly Bruce, +1 303 220 4202Matt Beake, +44 20 8483
6428Corporate Websitewww.libertyglobal.com
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