U.K. JV with Telefónica's O2 closed in June, integration
underway
Converged national champions now complete in our four key
markets
FMC strategy added ~140k broadband & postpaid mobile
subscribers in Q2
Announcing full fiber upgrade plan for existing U.K.
footprint to extend speed leadership position
Received non-binding offer to acquire 100% of UPC Poland at
9.3x 2021E Adjusted EBITDA
Committed to repurchasing 10% of market capitalization
annually for next three years, 2021 buyback authorization increased
by $400m
Liberty Global plc today announced its Q2 2021 financial
results.
CEO Mike Fries stated, “With the closing of the Virgin Media O2
joint venture during the second quarter, the converged national
champions in our four key markets are collectively positioned to
deliver unparalleled scale, competitive strength and strategic
optionality across the footprint. Virgin Media O2 is a powerful
combination, bringing together two iconic brands, two world-class
networks, and a combined customer base of 54 million1 subscribers,
all of whom are just beginning to find out how committed we are to
powering the U.K.’s recovery and creating unbeatable choice for
data-hungry consumers.
Our advanced fiber and 5G networks connected 87 million1
subscribers across Europe at June 30, currently generating
consolidated annual revenue of more than $7 billion2, while our
joint-ventures in the U.K. and the Netherlands produce combined
annual revenue of more than $17 billion3. As a result, we provide
our shareholders unmatched exposure to the leading FMC platforms
across Europe, with further upside potential from our global
Ventures effort. This portfolio encompasses more than 50
investments across technology, content and infrastructure,
including strategic stakes in such companies as Plume, ITV,
Lionsgate, Univision and the Formula E racing series. Meanwhile our
core operating assets are driving significant Adjusted Free Cash
Flow growth, as we look to create additional value through
adjacencies and by consistently applying our levered equity
strategy to supercharge growth in free cash flow per share.
We saw a return to rebased4 revenue growth in all core markets
in Q2 driven in large part by COVID recovery in sports and
advertising but also encouragingly through underlying organic
growth as we continue executing our convergence strategy. As a
result, we added 139,000 consolidated broadband and postpaid mobile
subscribers during the quarter, including 42,000 at Virgin Media
(U.K.) during April and May. Meanwhile in Switzerland, we have
identified an additional CHF 50 million of synergies at Sunrise UPC
(along with an associated CHF 100 million increase in costs to
capture5), which are now targeted at run-rate CHF 325 million with
an NPV of CHF 3.7 billion versus our original expectation for
run-rate synergies of CHF 275 million with an NPV of CHF 3.1
billion.
Today the Virgin Media O2 joint venture announced its intention
to upgrade its fixed network to full fiber- to-the-premise (FTTP)
with completion in 2028, building on its leadership position as the
U.K.’s largest gigabit broadband provider. The investment will
bolster the operator’s long-term network strategy, fuel future
connectivity innovation for consumers and businesses and create
options to potentially pursue the broadband wholesale market in the
U.K. We, along with our partner Telefónica, are fully supportive of
this value accretive project. The upgrade will be one of the U.K.’s
most efficient fiber rollouts, costing marginally more than our
previously planned Docsis 4 migration, and only a modest annual
increase to our current capital expenditure budget. We continue to
evaluate our future network strategies in our other operating
markets and are encouraged by the technology options (wholesale,
Docsis 4, FTTP) which are likely to vary by market as we position
ourselves for free cash flow growth and long-term value
creation.
At the consolidated level, we are reaffirming all of our
original, full-year guidance metrics, including $1.35 billion of
Adjusted Free Cash Flow(i) representing 26% YoY growth. With the
liquidity enhancing completion of the VMED O2 JV, our balance sheet
remains in great shape with $4.1 billion(ii) of cash and $5.7
billion of total liquidity6, and we continue to be aggressive
buyers of our stock, having repurchased ~$765 million through July
26. Given the strength of our current cash position and our
confidence in our core FMC operations, we have decided to commit to
repurchasing a minimum of 10% of our equity market capitalization
annually for the next three years. To the extent that 10% of our
market cap exceeds our annual FCF, we will use our existing cash to
fund the balance, providing certainty to our shareholders around a
baseline capital return strategy over the medium term. In the
meantime, we have increased our 2021 authorization by $400 million
to align with our new buyback program, targeting a full-year
repurchase commitment of $1.4 billion."
(i)
Adjusted Free Cash Flow is a non-GAAP
measure, see the Glossary for definitions. Quantitative
reconciliations to cash flow from operating activities for our
Adjusted FCF guidance cannot be provided without unreasonable
efforts as we do not forecast specific changes in working capital
that impact cash flows from operating activities. The items we do
not forecast may vary significantly from period to period. Absolute
full-year U.S. dollar guidance figures are based on FX rates of
EUR/USD 1.23, GBP/USD 1.36 and CHF/USD 1.12.
(ii)
Including amounts held under separately
managed accounts (SMAs).
Q2 Operating Company Highlights
Virgin Media (U.K. only, Consolidated April/May)
Strong Q2 performance taking strong commercial momentum into
the VMED O2 JV
Operating highlights: Operational
execution drove broadband and postpaid mobile growth of ~42,000
subscribers through April and May. We also generated continued
growth in new customers, adding 13,000 customer relationships
through the two months. In addition, the new Virgin Media O2 JV is
off to a strong start, adding 65,000 postpaid mobile subscribers
and 36,000 broadband subscribers on a pro forma basis in Q2. For
more information regarding Virgin Media O2, please visit their
investor relations page to access the JV's Q2 fixed income
release.
Financial highlights: Reported
revenue was $1,101.4 million in Q2 2021, reflecting the
consolidated results of the U.K. for April and May prior to
formation of the Virgin Media O2 joint venture. On a rebased basis,
revenue grew 4.4% through April and May as compared to the same
period of the prior year, providing top-line momentum into the
formation of the JV. The rebased revenue increase was primarily due
to (i) an increase in cable revenue driven by an increase in
fixed-line customers, (ii) higher B2B revenue due to an increase in
revenue related to long-term leases of a portion of our network and
continued customer growth, (iii) an increase in handset sales and
(iv) revenue recovery related to premium sports subscriptions.
Reported Adjusted EBITDA was $444.9 million in Q2 2021, reflecting
the consolidated result of the U.K. for April and May. Rebased
Adjusted EBITDA remained flat through April and May as compared to
the same period of the prior year, including the impact of $8
million costs to capture. Reported OFCF was $219.7 million in Q2
2021 also reflecting the consolidated result of the U.K. for April
and May. Rebased OFCF decreased 0.8% through the two months as
compared to the same period of the prior year, including the impact
of $9 million costs to capture.
Sunrise UPC (Consolidated)
Integration activities fully on track and synergy plans
upgraded; additional CHF 50 million of synergies identified
increasing total run-rate synergies upon completion to CHF 325
million
Operating highlights: Commercial
momentum continues with strong demand and stable churn leading to
6,100 broadband adds and 40,500 mobile postpaid adds in the
quarter. FMC penetration continues to grow, reaching 56% of the
broadband base. In Q2 we completed the MVNO migration to our mobile
network, the single largest operating cost synergy, several
quarters sooner than expected and we have further identified CHF 50
million of additional cost synergies, predominantly related to
network migrations, which we expect to achieve by 2025.
Financial highlights: Reported
revenue was $825.4 million in Q2 2021. On a rebased basis revenue
increased 1.3% YoY, primarily due to the net effect of (i) higher
mobile revenue driven by an increase in subscribers, (ii) lower
revenue from handset sales, (iii) an increase in B2B revenue
related to wholesale services and (iv) a decrease in cable
subscription revenue due to lower voice usage and video revenue.
Swiss Adjusted EBITDA was $298.5 million in Q2 2021 on a reported
basis. On a rebased basis Adjusted EBITDA declined 3.1%, primarily
due to (i) $9 million of costs to capture, (ii) higher growth
related opex, primarily due to an increase in marketing spend and
investments in B2B, and (iii) higher T&I costs. OFCF was $174.5
million in Q2 on a reported basis. On a rebased basis OFCF
increased 0.6% YoY, including the adverse impact of $22 million of
costs to capture.
Telenet (Consolidated)
Focus on customer relationships and convergence drives robust
operational performance
Operating highlights: Added 24,000
new broadband and postpaid mobile subscribers with continued
execution of our FMC strategy, which included the successful launch
of our new "ONE" converged bundles, reaching a total of 685,900
converged customers at June 30, 2021. Broadband subscribers grew by
6,000 in the quarter and we continued to execute our digitized
customer experience, notably making significant year on year
progress in self-install and digital sales.
Financial highlights: Solid
financial quarterly performance with reported and rebased revenue
increasing 13.5% and 3.7%, respectively, YoY in Q2 driven by (i)
higher broadcasting revenue, (ii) higher B2B subscription revenue
due to an increase in customers and (iii) higher revenue from
handset sales. Reported and rebased Adjusted EBITDA increased 10.0%
and 0.6%, respectively, YoY in Q2. The increase in rebased Adjusted
EBITDA was primarily due to the aforementioned revenue increase,
which was partially offset by higher programming spend resulting
from the impact of the acceleration of certain sports rights costs
during the second quarter of 2020. Reported and rebased OFCF
increased 3.3% and decreased 5.5%, respectively, for the same
period.
VodafoneZiggo (Non-consolidated Joint Venture)
Strong revenue growth across both Consumer and B2B;
reconfirming 2021 Guidance
Operating highlights: Added 56,000
mobile postpaid SIMs, bringing the YTD total to 117,000 net
additions. Added 14,000 converged households and 50,000 converged
mobile SIMS driving the converged penetration rate to 44% of
broadband RGUs and 72% of consumer mobile postpaid SIMs. SmartWifi
rollout and DocSis 3.1 upgrades continued in the quarter, with
nearly 50% of our network now reaching 1 GB speeds. Internet RGUs
saw a modest decline of 6,000, more than offset by 3% customer ARPU
growth.
Financial highlights: Q2 saw growth
across both Consumer and B2B, as revenue grew 12.4% on a reported
basis and 3.0% on a rebased basis YoY to $1,215.3 million, marking
nine consecutive quarters of top-line growth. Reported Adjusted
EBITDA increased 7.3% and rebased Adjusted EBITDA decreased 2.1%
YoY to $570.1 million, primarily driven by the positive impact of
certain benefits incurred in the prior-year Q2 period, which more
than offset the Adjusted EBITDA growth driven by a strong revenue
performance and disciplined cost control. OFCF decreased 3.4% on a
reported basis and 11.8% on a rebased basis YoY to $294.2 million
in Q2.
Q2 Other Highlights
Non-binding offer for UPC Poland
We recently received a non-binding offer from Iliad S.A. to
acquire 100% of our UPC Poland business at 9.3x its 2021E Adjusted
EBITDA, reflecting an enterprise value of PLN 7.3 billion ($1.9
billion)(i). Discussions are in process and there can be no
certainty that a transaction will ultimately be consummated. If any
agreement were to be reached, customary terms and conditions would
apply to any proposed transaction, including regulatory approvals.
We will update the market in due course on the outcome of these
discussions.
Ventures
Our Ventures portfolio is becoming an increasingly important
part of our overall value creation strategy as we continue to
invest in businesses that have products or services we can use as a
customer or as we create opportunities in adjacencies that leverage
our existing infrastructure. All of these investments are
strategic, aligned to our business and have the potential to create
incremental liquidity and value for us over the long run.
During the quarter, we announced the creation of our AtlasEdge
joint venture with DigitalBridge, a leading global investment firm
dedicated to digital infrastructure. AtlasEdge will deliver
services through an extensive network of facilities located close
to consumer and enterprise end users, the “edge” of the network.
The company aims to serve the growing demand from cloud providers,
streaming services and enterprises for high-performance, scalable
and secure facilities through which they can distribute low-latency
applications and services such as 5G, gaming, IOT and edge
computing. We expect the transaction to close in Q3 2021.
(i)
Based on an estimated 2021 Adjusted EBITDA
of PLN 782 million. Convenience translation based on USD/PLN spot
rate of .2621.
Environmental, Social and Governance (ESG)
We continue to be stewards of the environment, reducing waste
and carbon emissions, and ensuring a focus on sustainability in
everything we do. In Q2, we were recognized once again as a
sustainability leader, with our inclusion in the recent Financial
Times list of Europe's Climate Leaders for companies achieving the
greatest reduction in greenhouse gas emissions between 2014 and
2019. We continue to launch Green Bonds through our subsidiaries in
support of sustainability initiatives, and we have just released
our 2020 Corporate Responsibility report outlining our ESG progress
over the last year.
Our commitment to Diversity, Equity and Inclusion is creating
positive change, educating and empowering our people, and
strengthening a culture where everyone feels they belong. This past
quarter, we advanced initiatives and practices to achieve an
improved gender balance at each level of the organization and by
offering equal development opportunities. With disability inclusion
being one of our key focuses, we were also proud to join The
Valuable 500, a collective of global businesses championing
disability inclusion. And through our dedicated DE&I Council,
we continue to accelerate our ambitions and priorities across
Gender, LGBTQIA+, Ability, Race and Ethnicity, and
Multigenerational inclusivity and representation.
Liberty Global Consolidated Q2 Highlights
- Q2 revenue increased 14.1% YoY on a reported basis and 3.4% on
a rebased basis to $3,105.5 million
- Q2 net earnings increased 2,318.0% YoY on a reported basis to
$11,174.5 million
- Q2 Adjusted EBITDA increased 5.4% YoY on a reported basis and
decreased 0.3% on a rebased basis to $1,252.7 million
- Q2 property & equipment additions were 19.5% of revenue, as
compared to 21.6% in Q2 2020
- FMC penetration increased to 34% from 24% in Q2 2020
- Built 70,000 new premises during Q2, including 38,000 in the
U.K. during April and May
- Solid balance sheet with $5.7 billion of liquidity
- Comprised of $0.9 billion of cash, $3.2 billion of investments
held under SMAs and $1.6 billion of unused borrowing capacity7
- Gross and net leverage8 of 5.1x and 3.8x, respectively, on a
Full Company9 basis
- Fully-swapped borrowing cost of 3.6% on a debt balance of $15.4
billion for the Full Company
- Repurchased ~$765 million worth of shares through July 26
Liberty Global
Q2 2021
Q2 2020
YoY Change (reported)
YoY Change (rebased)
YTD 2021
YoY Change (reported)
YoY Change (rebased)
Customers
Organic customer additions
2,400
7,700
(68.8
%)
40,400
460.7
%
Financial (in
millions, except percentages)
Revenue
$
3,105.5
$
2,722.9
14.1
%
3.4
%
$
6,720.8
20.0
%
1.7
%
Net earnings (loss)
$
11,174.5
$
(503.8
)
2,318.0
%
$
12,614.8
2,354.7
%
Adjusted EBITDA
$
1,252.7
$
1,188.5
5.4
%
(0.3
%)
$
2,620.0
12.0
%
(1.0
%)
P&E additions
$
607.1
$
588.0
3.2
%
$
1,353.7
9.0
%
OFCF
$
645.6
$
600.5
7.5
%
(0.6
%)
$
1,266.3
15.5
%
2.1
%
Cash provided by operating activities
$
1,123.9
$
1,142.1
(1.6
%)
$
1,945.1
22.2
%
Cash used by investing activities
$
(4,924.0
)
$
(1,285.2
)
(283.1
%)
$
(5,433.4
)
(49.5
%)
Cash provided (used) by financing
activities
$
337.5
$
(938.1
)
136.0
%
$
(362.2
)
79.0
%
Adjusted FCF
$
624.2
$
455.7
37.0
%
$
717.3
417.2
%
Customer Growth
Three months ended
Six months ended
June 30,
June 30,
2021
2020
2021
2020
Organic customer net additions (losses)
by market
U.K.
13,300
22,900
41,700
21,300
Belgium
(6,300
)
(2,900
)
(10,800
)
(10,400
)
Switzerland
(3,900
)
(16,400
)
500
(32,800
)
Ireland
(3,300
)
1,000
(700
)
1,500
CEE (Poland and Slovakia)
2,600
3,100
9,700
9,200
Total
2,400
7,700
40,400
(11,200
)
Revenue Highlights
The following table presents (i) revenue of each of our
reportable segments, including the non-consolidated VodafoneZiggo
JV, 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)
Six months ended
Increase/(decrease)
June 30,
June 30,
Revenue
2021
2020
Reported %
Rebased %
2021
2020
Reported %
Rebased %
in millions, except %
amounts
U.K.(i)
$
1,101.4
$
1,417.3
(22.3
)
4.4
$
2,736.4
$
2,913.7
(6.1
)
2.6
Belgium
774.8
682.5
13.5
3.7
1,547.5
1,400.6
10.5
1.1
Switzerland
825.4
299.1
176.0
1.3
1,667.2
615.9
170.7
0.5
Ireland
134.1
115.2
16.4
6.4
270.2
239.8
12.7
3.0
CEE
130.2
116.2
12.0
2.9
258.8
235.3
10.0
3.1
Central and Corporate
143.7
97.5
47.4
3.8
250.9
203.1
23.5
1.2
Intersegment eliminations
(4.1
)
(4.9
)
N.M.
N.M.
(10.2
)
(9.7
)
N.M.
N.M.
Total
$
3,105.5
$
2,722.9
14.1
3.4
$
6,720.8
$
5,598.7
20.0
1.7
VodafoneZiggo JV(ii)
$
1,215.3
$
1,081.6
12.4
3.0
$
2,432.3
$
2,178.7
11.6
2.4
______________________
(i)
Represents the revenue of the U.K. JV
Entities through the June 1, 2021 closing of the VMED O2 JV
Transaction.
(ii)
Amounts reflect 100% of the 50:50
non-consolidated VodafoneZiggo JV's revenue.
N.M. - Not Meaningful
Net Earnings (Loss)
- Net earnings (loss) was $11,174.5 million and ($503.8 million)
for the three months ended June 30, 2021 and 2020, respectively,
and $12,614.8 million and $513.9 million for the six months ended
June 30, 2021 and 2020, respectively
Adjusted EBITDA Highlights
The following table presents (i) Adjusted EBITDA(*) of each of
our reportable segments, including the non-consolidated
VodafoneZiggo JV, 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)
Six months ended
Increase/(decrease)
June 30,
June 30,
Adjusted EBITDA
2021
2020
Reported %
Rebased %
2021
2020
Reported %
Rebased %
in millions, except %
amounts
U.K.(i)
$
444.9
$
601.7
(26.1
)
—
$
1,085.3
$
1,208.7
(10.2
)
(1.3
)
Belgium
389.6
354.1
10.0
0.6
761.4
685.7
11.0
1.8
Switzerland
298.5
150.9
97.8
(3.1
)
580.1
285.0
103.5
(5.2
)
Ireland
54.0
49.2
9.8
0.1
101.6
93.3
8.9
(0.4
)
CEE
59.5
52.7
12.9
3.4
116.5
107.0
8.9
1.9
Central and Corporate
6.2
(20.1
)
130.8
18.1
(24.9
)
(40.9
)
39.1
3.5
Total
$
1,252.7
$
1,188.5
5.4
(0.3
)
$
2,620.0
$
2,338.8
12.0
(1.0
)
VodafoneZiggo JV(ii)
$
570.1
$
531.5
7.3
(2.1
)
$
1,135.3
$
1,034.3
9.8
0.3
______________________
(i)
Represents the Adjusted EBITDA of the U.K.
JV Entities through the June 1, 2021 closing of the VMED O2 JV
Transaction.
(ii)
Amounts reflect 100% of the 50:50
non-consolidated VodafoneZiggo JV's Adjusted EBITDA.
(*)
Consolidated Adjusted EBITDA is a non-GAAP
measure, which we believe 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 readily view operating trends from a consolidated
view. Investors should view consolidated Adjusted EBITDA as a
supplement to, and not a substitute for, net earnings or loss and
other U.S. GAAP measures of performance. For additional information
on our Adjusted EBITDA measure, including a reconciliation from net
earnings (loss), see the Glossary.
OFCF Highlights
The following table presents (i) OFCF of each of our reportable
segments, including the non-consolidated VodafoneZiggo JV, 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)
Six months ended
Increase/(decrease)
June 30,
June 30,
OFCF
2021
2020
Reported %
Rebased %
2021
2020
Reported %
Rebased %
in millions, except %
amounts
U.K.(i)
$
219.7
$
295.0
(25.5
)
(0.8
)
$
527.9
$
574.4
(8.1
)
1.1
Belgium
251.8
243.8
3.3
(5.5
)
470.2
433.8
8.4
(0.8
)
Switzerland
174.5
96.3
81.2
0.6
301.9
161.2
87.3
(2.7
)
Ireland
29.9
33.1
(9.7
)
(17.8
)
58.3
58.2
0.2
(8.4
)
CEE
38.9
31.8
22.3
11.9
78.3
67.2
16.5
8.9
Central and Corporate
(69.2
)
(99.5
)
30.5
14.7
(170.3
)
(198.4
)
14.2
13.9
Total
$
645.6
$
600.5
7.5
(0.6
)
$
1,266.3
$
1,096.4
15.5
2.1
VodafoneZiggo JV(ii)
$
294.2
$
304.5
(3.4
)
(11.8
)
$
624.9
$
561.9
11.2
1.6
______________________
(i)
Represents the OFCF of the U.K. JV
Entities through the June 1, 2021 closing of the VMED O2 JV
Transaction.
(ii)
Amounts reflect 100% of the 50:50
non-consolidated VodafoneZiggo JV's OFCF.
Leverage and Liquidity
- Total principal amount of debt and
finance leases: $15.4 billion for the Full Company
- Leverage ratios: At June 30, 2021,
our adjusted gross and net leverage ratios were 5.1x and 3.8x,
respectively, on a Full Company basis
- Average debt tenor10: Over 7
years, with ~92% not due until 2027 or thereafter on a Full Company
basis
- Borrowing costs: Blended,
fully-swapped cost of debt was 3.6% for the Full Company
- Liquidity: $5.7 billion on a Full
Company basis, including (i) $0.9 billion of cash at June 30, 2021,
(ii) $3.2 billion of investments held under SMAs and (iii) $1.6
billion of aggregate unused borrowing capacity 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
the joint venture transaction in the U.K., including integration
efforts, anticipated benefits thereof including synergies, as well
as the anticipated U.K. network upgrade to FTTP and the timing and
benefits thereof; expectations regarding Sunrise UPC, including
integration and anticipated synergies from the Sunrise acquisition;
expectations regarding costs to capture; expectations regarding our
and our businesses' financial performance, including Rebased
Revenue, Rebased Adjusted EBITDA, Rebased OFCF and Adjusted FCF;
the offer to acquire UPC Poland and any potential resulting
definitive transaction; our Ventures strategy, including the
creation of the AtlasEdge joint venture; our commitments and
aspirations with respect to ESG and DE&I matters; our share
buyback program; the strength of our balance sheet (including cash
and liquidity position), tenor of our third-party debt, anticipated
borrowing capacity; 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 continued impact of the COVID-19 pandemic on us and
our businesses; 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.
Share Repurchase Program
As announced today, our Board of Directors has authorized a new
share repurchase program whereby we are committing to repurchase a
minimum of 10 percent of our equity market capitalization annually
for the next three years. Under the program, Liberty Global may
acquire from time to time its Class A ordinary shares, Class C
ordinary shares, or any combination of Class A and Class C ordinary
shares. The program may be effected through open market
transactions and/or privately negotiated transactions, which may
include derivative transactions. The timing of the repurchase of
shares pursuant to the program will depend on a variety of factors,
including market conditions and applicable law. The program may be
implemented in conjunction with brokers for the Company and other
financial institutions with whom the Company has relationships
within certain preset parameters and purchases may continue during
closed periods in accordance with applicable restrictions. The
program may be suspended or discontinued at any time.
About Liberty Global
Liberty Global (NASDAQ: LBTYA, LBTYB and LBTYK) is a world
leader in converged broadband, video and mobile communications
services. We deliver next-generation products through advanced
fiber and 5G networks that connect 85 million subscribers across
Europe and the United Kingdom. Our businesses operate under some of
the best-known consumer brands, including Virgin Media-O2 in the
U.K., VodafoneZiggo in The Netherlands, Telenet in Belgium, Sunrise
UPC in Switzerland, Virgin Media in Ireland and UPC in Eastern
Europe. Through our substantial scale and commitment to innovation,
we are building Tomorrow’s Connections Today, investing in the
infrastructure and platforms that empower our customers to make the
most of the digital revolution, while deploying the advanced
technologies that nations and economies need to thrive.
Our consolidated businesses generate annual revenue of more than
$7 billion, while our joint-ventures in the U.K. and the
Netherlands generate combined annual revenue of more than $17
billion.
Liberty Global Ventures, our global investment arm, has a
portfolio of more than 50 companies across content, technology and
infrastructure, including strategic stakes in companies like Plume,
ITV, Lions Gate, Univision, the Formula E racing series and several
regional sports networks.
Revenue figures above are provided based upon 2020 results and
on a combined Virgin Media and O2 U.K. basis. 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
Rebase growth percentages, which are non-GAAP measures, are
presented as a basis for assessing growth rates on a comparable
basis. For purposes of calculating rebased growth rates on a
comparable basis for all businesses that we owned during 2021, we
have adjusted our historical revenue, Adjusted EBITDA and OFCF for
the three and six months ended June 30, 2020 to (i) include the
pre-acquisition revenue, Adjusted EBITDA and P&E additions of
entities acquired during 2020 in our rebased amounts for the three
and six months ended June 30, 2020 to the same extent that the
revenue, Adjusted EBITDA and P&E additions of these entities
are included in our results for the three and six months ended June
30, 2021, (ii) exclude the revenue, Adjusted EBITDA and P&E
additions in our rebased amounts for the three and six months ended
June 30, 2020 for entities disposed of during 2021 and 2020 to the
same extent that the revenue, Adjusted EBITDA and P&E additions
of these entities are excluded in our results for the three and six
months ended June 30, 2021, (iii) include revenue and costs for the
temporary elements of transitional and other services provided to
the VMED O2 JV, 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 in
our results for the three and six months ended June 30, 2020 equal
to those included in our results for the three and six months ended
June 30, 2021 and (iv) reflect the translation of our rebased
amounts for the three and six months ended June 30, 2020 at the
applicable average foreign currency exchange rates that were used
to translate our results for the three and six months ended June
30, 2021. We have reflected the revenue, Adjusted EBITDA and
P&E additions of these acquired entities in our 2020 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,
Adjusted EBITDA 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. In addition, the rebased growth percentages are not
necessarily indicative of the revenue, Adjusted EBITDA 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, Adjusted EBITDA and OFCF that will occur in the
future. Investors should view rebased growth as a supplement to,
and not a substitute for, U.S. GAAP measures of performance
included in our condensed consolidated statements of
operations.
The following table provides adjustments made to the 2020
amounts (i) in aggregate for our consolidated reportable segments
and (ii) for the non-consolidated VodafoneZiggo JV to derive our
rebased growth rates:
Three months ended June 30,
2020
Six months ended June 30,
2020
Revenue
Adjusted EBITDA
OFCF
Revenue
Adjusted EBITDA
OFCF
in millions
Consolidated Liberty Global:
Acquisitions and Dispositions(i)
$
(10.4
)
$
(60.5
)
$
(15.7
)
$
486.9
$
84.3
$
38.2
Foreign Currency
291.5
128.0
64.7
523.7
223.0
106.0
Total increase
$
281.1
$
67.5
$
49.0
$
1,010.6
$
307.3
$
144.2
VodafoneZiggo JV(ii)
Foreign Currency
$
97.8
$
50.6
$
28.9
$
195.5
$
97.1
$
52.9
______________________
(i)
In addition to our acquisitions and
dispositions, these rebase adjustments also include amounts related
to agreements to provide transitional and other services to the
VMED O2 JV, the VodafoneZiggo JV, Vodafone, Liberty Latin America,
Deutsche Telekom and M7 Group. These adjustments result in an equal
amount of fees in both the 2021 and 2020 periods for those services
that are deemed to be temporary in nature.
(ii)
Amounts reflect 100% of the adjustments
made related to the VodafoneZiggo JV's revenue, Adjusted EBITDA and
OFCF, respectively, which we do not consolidate, as we hold a 50%
noncontrolling interest.
Liquidity
The following table details the U.S. dollar equivalent balances
of our liquidity position(i) at June 30, 2021, which includes our
(i) cash and cash equivalents, (ii) investments held under SMAs and
(iii) unused borrowing capacity at June 30, 2021:
Cash
Unused
and Cash
Borrowing
Total
Equivalents(ii)
SMAs (iii)
Capacity (iv)
Liquidity
in millions
Liberty Global and unrestricted
subsidiaries
$
670.4
$
3,239.5
$
—
$
3,909.9
UPC Holding
83.4
—
849.1
932.5
Telenet
112.4
—
657.6
770.0
VM Ireland
8.1
—
118.5
126.6
Total
$
874.3
$
3,239.5
$
1,625.2
$
5,739.0
______________________
(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
$1.6 billion represents maximum undrawn commitments under the
applicable facilities without regard to covenant compliance
calculations or other conditions precedent to borrowing.
Summary of Debt & Finance Lease Obligations
The following table(i) details the June 30, 2021 U.S. dollar
equivalent balances of the (i) outstanding principal amount of our
debt and finance lease obligations, (ii) expected principal related
derivative cash payments or receipts and (iii) swapped principal
amount of our debt and finance lease obligations:
Finance
Debt & Finance
Principal Related
Swapped Debt
Lease
Lease
Derivative
& Finance Lease
Debt(ii)
Obligations
Obligations
Cash Payments
Obligations
in millions
UPC Holding
$
7,728.8
$
22.6
$
7,751.4
$
(42.4
)
$
7,709.0
Telenet
5,812.7
457.8
6,270.5
170.0
6,440.5
VM Ireland
1,066.4
—
1,066.4
—
1,066.4
Other(iii)
295.0
41.7
336.7
—
336.7
Total
$
14,902.9
$
522.1
$
15,425.0
$
127.6
$
15,552.6
______________________
(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.
(iii)
Amounts are presented on a Full Company
basis.
Property and Equipment Additions and Capital
Expenditures
The table below highlights the categories of our property and
equipment additions for the indicated periods and reconciles those
additions to our capital expenditures that are presented in the
condensed consolidated statements of cash flows in our 10-Q.
Three months ended
Six months ended
June 30,
June 30,
2021
2020
2021
2020
in millions, except %
amounts
Customer premises equipment
$
132.2
$
109.4
$
286.4
$
256.9
New build & upgrade
103.0
134.3
242.9
293.8
Capacity
90.4
53.5
147.0
123.2
Baseline
142.6
127.4
367.8
265.0
Product & enablers
138.9
163.4
309.6
303.5
Total P&E additions
607.1
588.0
1,353.7
1,242.4
Reconciliation of P&E additions to
capital expenditures:
Assets acquired under capital-related
vendor financing arrangements(i)
(231.9
)
(332.0
)
(560.1
)
(702.9
)
Assets acquired under capital leases
(9.9
)
(6.1
)
(19.6
)
(17.2
)
Changes in current liabilities related to
capital expenditures
27.8
51.9
94.9
127.3
Total capital expenditures, net(ii)
$
393.1
$
301.8
$
868.9
$
649.6
P&E additions as % of revenue
19.5
%
21.6
%
20.1
%
22.2
%
______________________
(i)
Amounts exclude related VAT of $33.0
million and $55.1 million for the three months ended June 30, 2021
and 2020, respectively, and $74.4 million and $118.7 million for
the six months ended June 30, 2021 and 2020, 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.
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:
ARPU per Cable Customer
Relationship
Three months ended June
30,
Increase/(decrease)
2021
2020
Reported %
Rebased %
Liberty Global
$
62.60
$
57.35
9.2
%
(0.3
%)
U.K.
£
50.19
£
50.26
(0.1
%)
(0.3
%)
Ireland
€
59.33
€
59.50
(0.3
%)
(0.3
%)
Belgium (Telenet)
€
58.78
€
58.49
0.5
%
0.5
%
UPC Holding
€
39.24
€
36.57
7.3
%
(1.3
%)
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 June
30,
Increase/(decrease)
2021
2020
Reported %
Rebased %
Liberty Global:
Including interconnect revenue
$
23.87
$
15.97
49.5
%
(6.8
%)
Excluding interconnect revenue
$
20.10
$
13.24
51.8
%
(0.1
%)
Operating Data — June 30,
2021
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)
Belgium
3,388,900
2,037,300
1,712,100
90,300
1,695,600
1,785,900
1,141,700
4,639,700
2,956,900
Switzerland(v)
2,469,900
1,478,600
1,153,000
326,600
913,700
1,240,300
1,011,400
3,404,700
2,524,800
Ireland
949,700
434,500
387,300
—
318,700
318,700
288,300
994,300
123,700
Poland
3,669,400
1,535,400
1,309,100
273,200
1,081,800
1,355,000
618,900
3,283,000
105,400
Slovakia
629,700
189,900
145,800
32,200
137,000
169,200
88,600
403,600
—
Total Liberty Global
11,107,600
5,675,700
4,707,300
722,300
4,146,800
4,869,100
3,148,900
12,725,300
5,710,800
VodafoneZiggo JV(vi)
7,311,900
3,794,900
3,347,800
511,000
3,276,600
3,787,600
2,177,000
9,312,400
5,270,000
VMED O2 JV(vi)
15,476,400
5,677,100
5,494,100
13,281,100
31,358,100
Subscriber Variance Table —
June 30, 2021 vs. March 31, 2021
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.
38,000
13,300
19,700
—
(33,400
)
(33,400
)
(22,800
)
(36,500
)
11,500
Belgium
7,600
(6,300
)
6,000
(20,200
)
7,100
(13,100
)
(19,300
)
(26,400
)
11,400
Switzerland(v)
5,400
(3,900
)
6,100
(9,600
)
7,200
(2,400
)
4,400
8,100
44,500
Ireland
1,700
(3,300
)
(300
)
—
—
—
(6,600
)
(6,900
)
1,300
Poland
16,600
4,800
9,000
7,600
800
8,400
(11,100
)
6,300
17,500
Slovakia
1,900
(2,200
)
(900
)
500
(1,900
)
(1,400
)
(700
)
(3,000
)
—
Total Liberty Global organic
change
71,200
2,400
39,600
(21,700
)
(20,200
)
(41,900
)
(56,100
)
(58,400
)
86,200
Q2 2021 Liberty
Global Adjustments:
U.K.
(15,424,600
)
(5,668,400
)
(5,478,300
)
—
(3,413,200
)
(3,413,200
)
(4,396,500
)
(13,288,000
)
(3,419,200
)
Belgium
—
—
—
—
—
—
—
—
15,600
Switzerland
—
—
—
—
—
—
—
—
268,000
Total adjustments
(15,424,600
)
(5,668,400
)
(5,478,300
)
—
(3,413,200
)
(3,413,200
)
(4,396,500
)
(13,288,000
)
(3,135,600
)
VodafoneZiggo JV(vi)
13,800
(21,200
)
(6,500
)
(300
)
(23,200
)
(23,500
)
(45,900
)
(75,900
)
37,100
Footnotes for Operating Data and
Subscriber Variance Tables
(i)
In Switzerland, we offer a 10 Mbps
internet service to our Basic and Enhanced Video Subscribers
without an incremental recurring fee. Our Internet Subscribers in
Switzerland include 48,900 subscribers who have requested and
received this service.
(ii)
We have approximately 31,600 “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 210,900 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 June 30, 2021, our mobile subscriber count included 464,600
and 349,600 prepaid mobile subscribers in Switzerland and Belgium,
respectively.
(v)
Pursuant to service agreements,
Switzerland offers broadband internet, 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 June 30, 2021,
Switzerland’s partner networks accounted for 114,300 Fixed-Line
Customer Relationships, 293,700 RGUs, which include 107,300
Internet Subscribers, 103,100 Video Subscribers and 83,300
Telephony Subscribers. Subscribers to our enhanced video services
provided over partner networks largely 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 include
the 475,000 homes passed by Switzerland’s partner networks at June
30, 2021. In addition, with the completion of the acquisition of
Sunrise, we now service homes through Sunrise's existing agreements
with Swisscom, Swiss Fibre Net and local utilities, which are not
included in Switzerland's homes passed count. Including these
arrangements, our operations in Switzerland have the ability to
offer fixed services to a national footprint.
(vi)
Prepaid mobile customers are excluded from
the VodafoneZiggo JV's and VMED O2 JV's mobile telephony subscriber
counts after a period of inactivity of nine months and three
months, respectively. In addition, the mobile subscriber count for
the VMED O2 JV includes IoT connections, which are
Machine-to-Machine contract mobile connections including Smart
Metering contract connections.
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 and mobile subscribers at medium and large
enterprises, 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
Represents aggregate consolidated and 50%
owned non-consolidated fixed and mobile subscribers in accordance
with Liberty Global definitions, plus the wholesale mobile
subscribers of the VMED O2 JV.
2
Based off 2020 as reported Liberty Global
consolidated revenue as adjusted to (i) exclude the revenue of the
U.K. for the full year and (ii) include the estimated full year
revenue of Sunrise.
3
Based off 100% of the as reported 2020 NL
JV revenue and estimated full year 2020 VMED O2 JV revenue.
4
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.
5
Costs to capture generally include
incremental, third-party operating and capital related costs that
are directly associated with integration activities, restructuring
activities, and certain other costs associated with aligning an
acquiree to our business processes to derive synergies. These costs
are necessary to combine the operations of a business being
acquired (or joint venture being formed) with ours or are
incidental to the acquisition. As a result, costs to capture may
include certain (i) operating costs that are included in Adjusted
EBITDA, (ii) capital related costs that are included in property
and equipment additions and OFCF and (iii) certain integration
related restructuring expenses that are not included within
Adjusted EBITDA or OFCF. Given the achievement of synergies occurs
over time, certain of our costs to capture are recurring by nature,
and generally incurred within a few years of completing the
transaction.
6
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.
7
Our aggregate unused borrowing capacity of
$1.6 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 June 30, 2021 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 Ireland Credit Facility, under which we
expect the full unused capacity will remain unavailable to borrow
or upstream. Our above expectations do not consider any actual or
potential changes to our borrowing levels or any amounts loaned or
distributed subsequent to June 30, 2021.
8
Our debt and net debt ratios, which are
non-GAAP metrics, are prepared on a Full Company basis and are
defined as total debt and net debt, respectively, divided by
Adjusted EBITDA for the last twelve months (LTM Adjusted EBITDA).
Net debt is defined as total debt less cash and cash equivalents
and investments under separately managed accounts. Consistent with
how we calculate our leverage ratios under our debt agreements,
these ratios are presented on an adjusted basis to (i) include
certain debt that is classified as held for sale on our June 30,
2021 condensed consolidated balance sheet, (ii) exclude the
Adjusted EBITDA of the VMED O2 JV Entities as a result of the
formation of the VMED O2 JV and (iii) include the pro forma
pre-acquisition Adjusted EBITDA of Sunrise. For purposes of these
calculations, debt is measured using swapped foreign currency
rates, consistent with the covenant calculation requirements of our
subsidiary debt agreements. The following table details the
calculation of our debt and net debt to LTM Adjusted EBITDA ratios
as of and for the twelve months ended June 30, 2021 (in millions,
except ratios):
Reconciliation of LTM earnings to LTM
Adjusted EBITDA:
LTM earnings
$
9,617.0
Income tax expense
443.8
Other expense, net
277.6
Gain on VMED O2 JV Transaction
(11,138.0
)
Share of results of affiliates, net
179.7
Losses on debt extinguishment, net
90.8
Realized and unrealized gains due to
changes in fair values of certain investments and debt, net
(904.9
)
Foreign currency transaction losses,
net
1,995.4
Realized and unrealized losses on
derivative instruments, net
286.2
Interest expense
605.3
Operating income
1,452.9
Impairment, restructuring and other
operating items, net
(109.3
)
Depreciation and amortization
1,366.3
Share-based compensation expense
311.7
LTM Adjusted EBITDA
$
3,021.6
Debt to LTM Adjusted EBITDA:
Debt and finance lease obligations before
deferred financing costs, discounts and premiums
15,425.0
Principal related projected derivative
cash payments
127.6
Adjusted debt and finance lease
obligations before deferred financing costs, discounts and
premiums
$
15,552.6
LTM Adjusted EBITDA
$
3,021.6
Debt to LTM Adjusted EBITDA ratio
5.1
Net Debt to LTM Adjusted
EBITDA:
Adjusted debt and finance lease
obligations before deferred financing costs, discounts and
premiums
$
15,552.6
Cash and cash equivalents and investments
held under separately managed accounts
(4,113.8
)
Adjusted net debt and finance lease obligations before deferred
financing costs, discounts and premiums
$
11,438.8
LTM Adjusted EBITDA
$
3,021.6
Net debt to LTM Adjusted EBITDA ratio
3.8
9
The term "Full Company" includes certain
amounts which are presented as held for sale on our June 30, 2021
condensed consolidated balance sheet. For purposes of presenting
certain debt and liquidity metrics consistent with how we calculate
our leverage ratios under our debt agreements, we have included
these debt and finance lease obligations in our Full Company
metrics.
10
For purposes of calculating our average
tenor, total third-party debt excludes vendor financing.
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 EBITDA: Adjusted EBITDA is
the primary measure used by our chief operating decision maker to
evaluate segment operating performance and 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, Adjusted EBITDA
is defined as earnings (loss) before net income tax benefit
(expense), other non-operating income or expenses, net share of
results of affiliates, net gains (losses) on debt extinguishment,
net realized and unrealized gains (losses) due to changes in fair
value of certain investments and debt, net foreign currency
transaction gains (losses), net gains (losses) on derivative
instruments, net interest expense, 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 Adjusted EBITDA 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
consolidated Adjusted EBITDA measure, which is a non-GAAP 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.
Consolidated Adjusted EBITDA should be viewed as a measure of
operating performance that is a supplement to, and not a substitute
for U.S. GAAP measures of income included in our condensed
consolidated statements of operations.
A reconciliation of net earnings (loss) to Adjusted EBITDA is
presented in the following table:
Three months ended
Six months ended
June 30,
June 30,
2021
2020
2021
2020
in millions
Net earnings (loss)
$
11,174.5
$
(503.8
)
$
12,614.8
$
513.9
Income tax expense (benefit)
282.8
(158.0
)
453.3
(77.9
)
Other income, net
(7.2
)
(9.5
)
(17.3
)
(61.9
)
Gain on VMED O2 JV Transaction
(11,138.0
)
—
(11,138.0
)
—
Share of results of affiliates, net
8.1
105.4
6.4
72.0
Losses on debt extinguishment, net
90.6
165.6
90.6
220.1
Realized and unrealized losses (gains) due
to changes in fair values of certain investments and debt, net
(288.1
)
(152.3
)
(482.7
)
377.5
Foreign currency transaction losses
(gains), net
(133.3
)
478.0
(436.4
)
86.3
Realized and unrealized losses (gains) on
derivative instruments, net
303.1
319.7
(508.0
)
(917.6
)
Interest expense
273.0
281.7
608.1
595.0
Operating income
565.5
526.8
1,190.8
807.4
Impairment, restructuring and other
operating items, net
6.9
32.2
51.3
63.2
Depreciation and amortization
580.5
545.7
1,214.7
1,329.2
Share-based compensation expense
99.8
83.8
163.2
139.0
Adjusted EBITDA
$
1,252.7
$
1,188.5
$
2,620.0
$
2,338.8
Adjusted Free Cash Flow (FCF): Net
cash provided by our operating activities, plus (i) cash payments
or receipts 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). We
believe that our presentation of Adjusted Free Cash Flow, which is
a non-GAAP measure, 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 to Adjusted Free Cash Flow for the
indicated periods.
Three months ended
Six months ended
June 30,
June 30,
2021
2020
2021
2020
in millions
Net cash provided by operating
activities
$
1,123.9
$
1,142.1
$
1,945.1
$
1,591.9
Cash payments for direct acquisition and
disposition costs
33.3
9.9
46.5
10.4
Expenses financed by an
intermediary(i)
631.1
551.7
1,483.4
1,274.5
Capital expenditures, net
(393.1
)
(301.8
)
(868.9
)
(649.6
)
Principal payments on amounts financed by
vendors and intermediaries
(754.9
)
(933.0
)
(1,856.8
)
(2,054.0
)
Principal payments on certain finance
leases
(16.1
)
(13.2
)
(32.0
)
(34.5
)
Adjusted FCF
$
624.2
$
455.7
$
717.3
$
138.7
_______________
(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.
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, which
is a non-GAAP measure, 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 Adjusted EBITDA, 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 or through a partner
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 Ireland. Project Lightning
infill build relates to construction in areas adjacent to our
existing network.
Mobile Subscriber Count: For
residential and business subscribers, 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.
OFCF: As used herein, Operating
Free Cash Flow or "OFCF", which is a non-GAAP measure, represents
Adjusted EBITDA 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.
A reconciliation of Adjusted EBITDA to OFCF is presented in the
following table:
Three months ended
Six months ended
June 30,
June 30,
2021
2020
2021
2020
in millions
Adjusted EBITDA
$
1,252.7
$
1,188.5
$
2,620.0
$
2,338.8
Property and equipment additions
(607.1
)
(588.0
)
(1,353.7
)
(1,242.4
)
OFCF
$
645.6
$
600.5
$
1,266.3
$
1,096.4
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 Switzerland
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210729006148/en/
Investor Relations Max Adkins +44 78 1795 9705 Steve
Carroll +1 303 784 4505 Amy Ocen +1 303 784 4528
Corporate Communications Molly Bruce +1 303 220 4202 Matt
Beake +44 20 8483 6428
Liberty Global (NASDAQ:LBTYK)
Historical Stock Chart
From Sep 2024 to Oct 2024
Liberty Global (NASDAQ:LBTYK)
Historical Stock Chart
From Oct 2023 to Oct 2024