Sale price of PLN 7.0 billion ($1.8 billion1) values UPC
Poland at ~9x 2021E Adjusted EBITDA2,3 and nearly 20x 2021E
Operating Free Cash Flow4
Transaction expected to close in the first half of 2022 and
generate approximately $600 million of net cash proceeds to Liberty
Global after debt repayment
Liberty Global plc (“Liberty Global”) (NASDAQ: LBTYA, LBTYB and
LBTYK), one of the world’s leading converged video, broadband and
mobile communications companies, today announced it has reached a
definitive agreement to sell 100% of its operations in Poland to
iliad S.A.’s Polish mobile subsidiary Play. At June 30, 2021, our
networks in Poland passed 3.7 million homes and served 1.5 million
customers who subscribed to 1.3 million broadband, 1.4 million
video, and over 600,000 telephony services.
Liberty Global has agreed to sell UPC Poland for a total
enterprise value of PLN 7.0 billion ($1.8 billion) subject to
customary debt and working capital adjustments at completion. The
sale price represents a multiple of approximately 9x UPC Poland’s
estimated 2021 Adjusted EBITDA, and nearly 20x its estimated 2021
operating free cash flow. Closing of the transaction is subject to
satisfaction of customary closing conditions, including receipt of
requisite regulatory approvals. The closing is currently expected
to occur in the first half of 2022.
Iliad S.A. is the parent company of the iliad Group, which
operates under the trade names of Free in France, iliad in Italy
and Play in Poland. Play is a consumer-focused mobile network
operator in Poland with over 15 million subscribers. It provides
mobile voice, messaging, data and video services for both consumers
and businesses (in particular SMEs) on a contract and prepaid basis
under the umbrella brand Play. Its modern and cost-efficient 4G
LTE/5G telecommunications network covers 99% of the Polish
population.
Mike Fries, Chief Executive Officer of Liberty Global said,
“This transaction highlights, yet again, the significant value of
fiber-rich HFC networks in Europe, as well as the substantial
synergy benefits inherent in fixed-mobile convergence (“FMC”)
mergers. We have been operating in Poland for over 20 years and are
proud of our contributions to the country’s growing digital economy
and the impact that we’ve made in the communities where we operate.
I’d like to thank and commend the entire UPC Poland management
team, most recently under Robert Redeleanu’s leadership, for their
hard work and dedication over the years. UPC Poland, the largest
cable television operator and a leading provider of triple play
services in Poland, and Play, which covers 99% of the Polish
population with its mobile services, together will have the scale
from Day 1 to be a powerful force in the Polish market. We are
highly supportive of the rationale behind this combination and are
excited to watch this converged national champion deliver
high-quality connectivity across the Polish market.”
“The cash proceeds, net of debt repayment, from this asset sale
of approximately $600 million will boost Liberty Global’s already
substantial cash balance, which stood at $4.1 billion5 as of June
30, 2021. As ever, we remain squarely focused on value creation and
are pleased with the premium valuation we received for our Polish
business, providing a strong return for Liberty Global
shareholders.”
Proceeds from the sale (net of debt repayment at the UPC bank
group) are expected to be used for general corporate purposes,
which may include reinvestment into our business and support for
the company’s significant, multi-year share buyback commitment.
In conjunction with the transaction, Liberty Global has agreed
to provide Play with certain transitional services for a period of
up to four years. These services principally will be comprised of
network and information technology-related functions. Annual
charges will depend upon the actual level of services required by
Play.
Credit Suisse acted as financial advisor to Liberty Global on
the transaction.
Forward-Looking Statements and
Disclaimer
This press release contains forward-looking statements within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995, including statements regarding our strategic outlook, the
anticipated timing of regulatory approvals and closing of the
transaction, the expected benefits of the transaction, the amount
and expected use of net proceeds, expectations with respect to our
continuing operations and our cash balance 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 the
ability to obtain regulatory approvals for the transaction, as well
as achieve other customary closing conditions, the ability of Play
to successfully integrate the combined businesses impacted by the
transaction and achieve the anticipated benefits thereof, as well
as other factors detailed from time to time in Liberty Global’s
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. Liberty Global expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any
forward-looking statement contained herein to reflect any change in
Liberty Global’s expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is
based.
ABOUT LIBERTY GLOBAL
Liberty Global (NASDAQ: LBTYA, LBTYB and LBTYK) is a world
leader in converged broadband, video and mobile communications
services. We deliver next-generation products through advanced
fiber and 5G networks that connect over 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 UK, 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 and the Formula E racing series.
Revenue figures above are provided based upon 2020 results and
on a combined Virgin Media and O2 UK basis. For more information,
please visit www.libertyglobal.com.
1 Convenience translation based on the August 31, 2021 USD/PLN
spot rate of .2611. 2 The Adjusted EBITDA sale price multiple
calculation is based on the estimated 2021 Adjusted EBITDA of UPC
Poland of PLN 782 million including PLN 42 million of estimated
operating-related expenses for services that will continue to be
provided by Liberty Global to Play as part of the transitional
services agreement and excluding PLN 76 million of estimated
capital-related transitional service charges to be provided by
Liberty Global to Play, which we expect to be reported in the
Adjusted EBITDA of Play following completion of the transaction. 3
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
gains (losses) on debt extinguishment, 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 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. 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 statements of operations. A quantitative
reconciliation to earnings (loss) for the estimated 2021 Adjusted
EBITDA of UPC Poland cannot be provided without unreasonable
efforts as we do not forecast certain non-cash charges including
depreciation and amortization and impairment, restructuring and
other operating items included in operating income. The items we do
not forecast may vary significantly from period to period. 4 OFCF
is defined as Adjusted EBITDA less property and equipment
additions, as customarily defined by Liberty Global. For the
purpose of the OFCF sale price multiple calculation, UPC Poland’s
estimated 2021 OFCF has been decreased by PLN 76 million of
estimated capital-related transitional service charges, which we
expect to be reported in Adjusted EBITDA of Play following
completion of the transaction. 5 Including amounts held under
separately managed accounts (SMAs).
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Investor Relations: Michael Bishop +44 20 8483 6246 Steve
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Corporate Communications: Molly Bruce +1 303 220 4202
Matt Beake +44 20 8483 6428
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