Strong demand for connectivity driving sustained volume
growth, added 266k1 aggregate broadband and postpaid mobile
subscribers in Q3
New FMC portfolios launched in the UK and Switzerland;
integration and synergy plans in both markets progressing
well
Network strategies steadily advancing with over 80% of fixed
footprint actively marketing 1 Gbps broadband, new network plans
announced in Belgium and Ireland
Upgrading FY'21 Full Company2 Adjusted Free Cash Flow
guidance
On track for full-year share repurchases of $1.4
billion
Liberty Global plc today announced its Q3 2021 financial
results. Effective with the release of our third quarter earnings
we have stopped using the term Operating Free Cash Flow ("OFCF")
and now use the term "Adjusted EBITDA less P&E Additions". As
we define the term, Adjusted EBITDA less P&E Additions has the
same meaning as OFCF had previously, and therefore does not impact
any previously reported amounts.
CEO Mike Fries stated, “Q3 marked the first full quarter of
operations for all four of our converged national champions, as we
continue demonstrating strong commercial momentum across the group.
Operationally, we added 266,0001 aggregate broadband and postpaid
mobile subscribers during the quarter driven by continued execution
of our convergence strategies. In the UK and Switzerland, we remain
on track with our integration and synergy plans, while recently
introducing new FMC portfolios at both Virgin Media O2 and Sunrise
UPC. Virgin Media O2's VOLT campaign builds on its rapidly growing
gigabit-ready footprint and 5G coverage across the UK. In
Switzerland, our new Sunrise We bundles allow customers to benefit
from the best broadband connectivity in the market and a completely
new Sunrise TV service.
During the quarter we continued advancing our network
development strategies in all of our operations. In the UK, Virgin
Media O2 increased its 1Gbps footprint by 75% to reach nearly 13
million UK homes, while FTTP upgrade pilots are underway as part of
its plan to deploy a full fiber overlay across the entire HFC
network by 2028. Meanwhile in Belgium, Telenet recently announced
the intention to create a new, self-funding NetCo with utility
company Fluvius that will own the “data network of the future” in
Flanders. And in Ireland, we are announcing plans today to upgrade
our fixed HFC network with a low-cost FTTH overlay during the next
three years - a project requiring less than €100 million of new
equity.
We also continued making solid progress in terms of our Ventures
investments and running our levered equity strategy for value
creation. We reached a definitive agreement to sell UPC Poland for
a total enterprise value of PLN 7.0 billion ($1.8 billion3). The
sale price represents a multiple of approximately 9x UPC Poland’s
estimated 2021 Adjusted EBITDA4(i), and nearly 20x its estimated
2021 Adjusted EBITDA less P&E Additions5. Net cash proceeds to
Liberty Global are expected to be ~$600 million and the transaction
is expected to close in H1’22.
Our Ventures portfolio, valued at $3.1 billion6, is becoming too
big to ignore with focused investment strategies around technology,
content and infrastructure – in markets and services directly
adjacent to our core FMC operations. In Q3 we formed a joint
venture with DigitalBridge called AtlasEdge to serve the growing
European demand for scalable data center capacity that brings
applications and content closer to the edge. We continue to benefit
from some of our early-stage venture capital deals as well, such as
Plume which operates one of the largest Software Defined Networks
(SDN) in the world, offering an AI-driven, cloud-based platform for
managing the customer experience on home and small business WiFi
networks. Plume recently announced the closing of a $300 million
Series F round that raised the company's disclosed valuation to
$2.6 billion, adding significant value to our ownership stake.
At the consolidated level, we are increasing our full-year
guidance for Full Company Adjusted Free Cash Flow(ii) to $1.45
billion, representing 36% YoY growth. This is supported by Virgin
Media O2's distributions guidance to shareholders of at least £300
million for FY'21 and VodafoneZiggo has refined its FY'21
shareholder distributions target to a minimum of €600 million(iii).
Liberty Global’s balance sheet remains in great shape with $4.3
billion(iv) of cash (pro forma for ~$600 million of net cash
proceeds expected from the sale of UPC Poland) and $5.9 billion of
total liquidity7 (pro forma for UPC Poland), and we continue to be
aggressive buyers of our stock, having repurchased ~$1.1 billion
through the end of October against our full-year repurchase
commitment of $1.4 billion. And we look forward to executing on the
commitment to repurchase 10% of our shares outstanding in both 2022
and 2023."
(i)
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.
(ii)
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.
(iii)
VodafoneZiggo shareholder
distributions reflect 2021 YTD cash generated in excess of our
$123.0 million 2021 YTD funding of the shareholder loans.
(iv)
Including amounts held under
separately managed accounts (SMAs).
Q3 Operating Company Highlights
Sunrise UPC (Consolidated)
“Sunrise We” fully converged bundles launched; Sunrise UPC
performing well in competitive market
Operating highlights: Sunrise UPC
continues to execute its strategic plan towards becoming a national
converged champion. Continued sales momentum on fixed combined with
stable low churn resulted in 5,000 broadband additions in Q3.
Demand for mobile postpaid remains strong with 43,000 net adds
across all brands due in part to a relief in COVID travel
restrictions. With the expanded Sunrise We portfolio, Sunrise
customers are now benefiting for the first time from the combined
Sunrise UPC network, our new TV platform and more attractive
converged bundles for residential and business customers.
Financial highlights: Reported
revenue was $830.2 million in Q3 2021, flat on a rebased8 basis YoY
primarily due to the net effect of (i) higher mobile revenue driven
by an increase in subscribers, (ii) lower revenue from handset
sales and (iii) a decrease in fixed subscription revenue due to
lower voice and video revenues. Swiss reported Adjusted EBITDA was
$330.8 million in Q3 2021. On a rebased basis, Adjusted EBITDA
increased 3.3%, including $3 million of costs to capture9. Adjusted
EBITDA less P&E Additions was $195.9 million in Q3 on a
reported basis. On a rebased basis, Adjusted EBITDA less P&E
Additions increased 13.1% YoY, including the adverse impact of $27
million of costs to capture.
Telenet (Consolidated)
Solid operational and financial results in Q3 2021
Operating highlights: Commercial
traction continued in Q3 2021, including a strong uptake of net new
FMC customers driven by Telenet's new "ONE(Up)" bundles. Telenet
entered into a non-binding term sheet with Fluvius with the aim of
evolving their joint fixed network infrastructure in Flanders to
“the data network of the future”. To this end, Telenet and Fluvius
will create together a new self-funding independent infrastructure
company (“NetCo”) that will run an open access network,
contributing both existing HFC and fiber assets as well as
developing new build fiber assets in the future. NetCo is expected
to enjoy a high network utilization rate from the start driven by
Telenet’s existing customer relationships and the incremental
traffic generated by wholesale partners. It is intended to be a
multiparty partnership, and will be open to further partnering with
strategic and/or financial parties. Telenet also commenced a
strategic review of its telecommunications tower business to
potentially enhance shareholder value.
Financial highlights: Reported and
rebased revenue increased 1.2% and 0.4%, respectively, YoY to
$755.4 million in Q3 driven by (i) an increase in wholesale revenue
due to higher data usage, (ii) higher broadband revenue driven by
customer growth and (iii) higher broadcasting revenue. Reported and
rebased Adjusted EBITDA increased 0.5% and decreased 0.4%,
respectively, YoY to $369.1 million in Q3, reflecting a difficult
comparison against the same period last year and seasonality in
some of our operating expenses. Reported and rebased Adjusted
EBITDA less P&E Additions decreased 3.4% and 4.2%,
respectively, to $235.8 million in Q3.
Virgin Media O2 (Non-consolidated Joint Venture)
Virgin Media O2 challenges the market as it launches first
joint bundles, expands gigabit footprint and drives revenue
growth
Operating highlights: First
converged product, VOLT, went live in the market just four months
after company formed. Contract mobile net adds were 108,000 in Q3.
Q3 broadband net adds were 42,000 reflecting the continued demand
for faster broadband speeds, with a sixth consecutive quarter of
growth in both Project Lightning areas and the existing footprint.
The average speed across the company’s broadband base was 202Mbps
at the end of Q3, fully 4x the national average of 50Mbps. The
company’s gigabit footprint now reaches 12.8 million premises and
is on track to provide network-wide coverage of its 1.1Gbps speeds
by the end of 2021. Supported thousands of businesses through the
pandemic with SOHO customer base up 38% YoY.
Financial highlights (in US GAAP):
Revenue increased 0.8% YoY on an FX neutral pro forma basis10 to
$3,614.0 million in Q3, primarily driven by an increase in handset
revenue fueled by increased upgrade activity following new hardware
launches from Samsung and Apple, offset by lower service revenue
due to the continued impact of a change in the distribution channel
mix. Adjusted EBITDA decreased 0.4% YoY on an FX neutral pro forma
basis to $1,180.3 million, including $15 million of opex costs to
capture, primarily due to a change in the revenue mix and increased
investment in future growth drivers of digitalization, product
development, and increased sales and marketing expenses ahead of
the peak Q4 trading period as well as higher programming costs.
Adjusted EBITDA less P&E Additions decreased 14.3% YoY on an FX
neutral pro forma basis to $507.8 million in Q3, including $28
million of opex and capex costs to capture, while investing in
capital projects to deliver future growth.
For more information regarding Virgin Media O2 including full
IFRS disclosures, please visit their investor relations page to
access the JV's Q3 earnings release.
VodafoneZiggo (Non-consolidated Joint Venture)
Sustained Financial Momentum; Full Year Guidance
Updated
Operating highlights: Added 67,000
mobile postpaid subscribers, bringing the YTD total to 183,000 net
additions. Added 9,000 converged households, driving improvements
in Net Promoter Scores (NPS) and churn. VodafoneZiggo plans to
deploy ~1 million SmartWiFi Plume pods across its customer base by
year end in order to optimize their connectivity experience. Over
60% of connected households are now upgraded to 1 Gbps internet
speeds, including over 1 million customers in the third
quarter.
Financial highlights: Revenue grew
3.4% on a reported basis and 1.8% on a rebased basis YoY to
$1,206.1 million, marking the tenth consecutive quarter of top-line
growth, primarily driven by an increase in mobile customers,
roaming and visitor recovery, and fixed ARPU growth. Reported and
rebased Adjusted EBITDA increased 3.4% and 2.4%, respectively, YoY
to $578.1 million, primarily driven by the aforementioned strong
revenue growth. Adjusted EBITDA less P&E Additions increased
10.8% on a reported basis and 9.1% on a rebased basis YoY to $383.5
million, driven by lower property and equipment spend and Adjusted
EBITDA growth. 2021 shareholder distribution guidance updated to
over €600 million.
Q3 Ventures/ESG Highlights
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. These investments are strategic,
aligned to our business and have the potential to create
incremental liquidity and value for us over the long run.
Our AtlasEdge joint venture with DigitalBridge, a leading global
investment firm dedicated to digital infrastructure, closed during
Q3. AtlasEdge will deliver connectivity services through an
extensive network of facilities located close to consumer and
enterprise end users at 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.
Plume recently announced that it closed $300 million in a new
round of minority equity investment led by SoftBank Vision Fund 2,
adding significant value to our ownership stake. This financing
brought the company’s disclosed valuation to $2.6 billion, and will
drive continued research and development, sales and marketing,
partnerships, and acquisitions. According to Plume, in the last two
quarters since its prior funding round, the company added more than
13 million new households for a total of 35+ million locations
globally, over 350 million new managed devices to its global cloud
platform, and acquired more than 60 new Communications Service
Provider (CSP) customers.
Environmental, Social and Governance (ESG)
Liberty Global continues its commitment to enhancing
sustainability and energy efficiency, with a focus on energy use,
carbon emissions and management of electronic waste. Today, we are
committing to Net Zero targets across Scopes 1 and 2, meaning we
will eliminate the greenhouse gases we produce both directly and
indirectly across our business by 2030. Further, we are in the
final stages of our analysis and alignment planning to include
Scope 3 within our Net Zero commitment, removing indirect emissions
produced across our entire value chain. We anticipate we will
confirm this ambition mid-2022.
Over the last year, our sustainability efforts have positioned
us a leader within our industry. Liberty Global is a founding
member of the European Green Digital Coalition, announced earlier
this year. We were among the first 500 companies worldwide to
develop approved Science-based Targets to reduce carbon emissions
in alignment with the 2015 Paris Agreement, and our environmental
initiatives and focus on carbon emissions garnered an A- score by
the Carbon Disclosure Project (CDP).
Additionally, Diversity, Equity and Inclusion (DE&I)
continues to be a focus for us, reinforcing an inclusive work
environment, where our people know their voices are heard, valued,
respected and everyone feels they belong. During the quarter, we
announced our new Chief DE&I Officer, Soraya Loerts, who will
help steer and deliver our DE&I agenda and vision, co-created
by our dedicated DE&I Council. In its second year, the
Council’s agenda is accelerating across its priorities of Gender,
LGBTQIA+, Ability, Race and Ethnicity, and Multigenerational
inclusivity and representation in the workplace.
Liberty Global Consolidated Q3 Highlights
- Q3 revenue decreased 33.2% YoY on a reported basis and
increased 0.7% on a rebased basis to $1,901.4 million
- Q3 earnings (loss) from continuing operations increased 132.0%
YoY on a reported basis to $315.6 million
- Q3 Adjusted EBITDA decreased 34.8% YoY on a reported basis and
increased 1.0% on a rebased basis to $758.5 million
- Q3 property & equipment additions were 19.1% of revenue, as
compared to 22.1% in Q3 2020
- Balance sheet with $5.3 billion of total liquidity
- Comprised of $0.8 billion of cash, $2.9 billion of investments
held under SMAs and $1.6 billion of unused borrowing
capacity11
- Fully-swapped borrowing cost of 3.5% on a debt balance of $15.2
billion for the Full Company
Liberty Global (continuing operations)
Q3 2021
Q3 2020
YoY Change (reported)
YoY Change (rebased)
YTD 2021
YoY Change (reported)
YoY Change (rebased)
Customers
Organic customer additions (losses)
(5,400
)
27,300
(119.8
%)
24,600
339.3
%
Financial (in
millions, except percentages)
Revenue
$
1,901.4
$
2,845.4
(33.2
%)
0.7
%
$
8,390.5
1.9
%
0.9
%
Earnings (loss) from continuing
operations
$
315.6
$
(985.6
)
132.0
%
$
12,889.2
2,666.5
%
Adjusted EBITDA
$
758.5
$
1,163.5
(34.8
%)
1.0
%
$
3,273.2
(3.9
%)
(0.4
%)
P&E additions
$
362.6
$
629.9
(42.4
%)
$
1,683.8
(8.5
%)
Adjusted EBITDA less P&E Additions
$
395.9
$
533.6
(25.8
%)
6.6
%
$
1,589.4
1.5
%
3.7
%
Cash provided by operating activities
$
563.2
$
1,068.7
(47.3
%)
$
2,414.0
(6.0
%)
Cash used by investing activities
$
(297.1
)
$
(523.4
)
43.2
%
$
(5,704.3
)
(38.0
%)
Cash provided (used) by financing
activities
$
(387.0
)
$
2,074.0
(118.7
%)
$
(734.3
)
(302.2
%)
Full Company Adjusted FCF
$
304.3
$
403.0
(24.5
%)
$
1,021.6
88.6
%
Customer Growth
Three months ended
Nine months ended
September 30,
September 30,
2021
2020
2021
2020
Organic customer net additions (losses)
by market
UK(i)
—
37,600
41,700
58,900
Belgium
(2,300
)
(3,100
)
(13,100
)
(13,500
)
Switzerland
(1,600
)
(6,300
)
(1,100
)
(39,100
)
Ireland
(1,100
)
(300
)
(1,800
)
1,200
Slovakia
(400
)
(600
)
(1,100
)
(1,900
)
Total
(5,400
)
27,300
24,600
5,600
(i)
Represents the organic customer
net additions of the UK JV Entities through the June 1, 2021
closing of the UK JV Transaction.
Earnings (Loss) from Continuing Operations
- Earnings (loss) from continuing operations were $315.6 million
and ($985.6 million) for the three months ended September 30, 2021
and 2020, respectively, and $12,889.2 million and ($502.2 million)
for the nine months ended September 30, 2021 and 2020,
respectively
Financial Highlights
The following tables present (i) revenue, Adjusted EBITDA(*) and
Adjusted EBITDA less P&E Additions for each of our reportable
segments, including the non-consolidated VMED O2 JV and
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)
Nine months ended
Increase/(decrease)
September 30,
September 30,
Revenue
2021
2020
Reported %
Rebased %
2021
2020
Reported %
Rebased %
in millions, except %
amounts
Continuing operations:
UK(i)
$
—
$
1,543.6
(100.0
)
—
$
2,736.4
$
4,457.3
(38.6
)
2.6
Belgium
755.4
746.6
1.2
0.4
2,302.9
2,147.2
7.3
0.9
Switzerland
830.2
315.0
163.6
—
2,497.4
930.9
168.3
0.3
Ireland
136.0
126.4
7.6
6.9
406.2
366.2
10.9
4.3
Central and Other
181.4
118.9
52.6
1.7
458.7
346.9
32.2
1.2
Intersegment eliminations
(1.6
)
(5.1
)
N.M.
N.M.
(11.1
)
(14.8
)
N.M.
N.M.
Total
$
1,901.4
$
2,845.4
(33.2
)
0.7
$
8,390.5
$
8,233.7
1.9
0.9
VMED O2 JV(ii)
$
3,614.0
$
—
N.M.
N.M.
$
4,822.5
$
—
N.M.
N.M.
VodafoneZiggo JV(ii)
$
1,206.1
$
1,166.7
3.4
1.8
$
3,638.4
$
3,345.4
8.8
2.2
______________________
(i)
Represents the revenue of the UK
JV Entities through the June 1, 2021 closing of the UK JV
Transaction.
(ii)
Amounts reflect 100% of the 50:50
non-consolidated VMED O2 JV and VodafoneZiggo JV's revenue.
N.M. - Not Meaningful
Three months ended
Increase/(decrease)
Nine months ended
Increase/(decrease)
September 30,
September 30,
Adjusted EBITDA
2021
2020
Reported %
Rebased %
2021
2020
Reported %
Rebased %
in millions, except %
amounts
Continuing operations:
UK(i)
$
—
$
610.9
N.M.
—
$
1,085.3
$
1,819.6
(40.4
)
(1.3
)
Belgium
369.1
367.4
0.5
(0.4
)
1,130.5
1,053.1
7.3
1.1
Switzerland
330.8
154.4
114.2
3.3
910.9
439.4
107.3
(2.3
)
Ireland
59.1
49.9
18.4
17.6
160.7
143.2
12.2
5.6
Central and Other
1.5
(20.5
)
107.3
(93.6
)
(15.8
)
(50.6
)
68.8
(189.0
)
Intersegment eliminations
(2.0
)
1.4
N.M.
N.M.
1.6
1.4
N.M.
N.M.
Total
$
758.5
$
1,163.5
(34.8
)
1.0
$
3,273.2
$
3,406.1
(3.9
)
(0.4
)
VMED O2 JV(ii)
$
1,180.3
$
—
N.M.
N.M.
$
1,591.3
$
—
N.M.
N.M.
VodafoneZiggo JV(ii)
$
578.1
$
559.1
3.4
2.4
$
1,713.4
$
1,593.4
7.5
1.0
______________________
(i)
Represents the Adjusted EBITDA of
the UK JV Entities through the June 1, 2021 closing of the UK JV
Transaction.
(ii)
Amounts reflect 100% of the 50:50
non-consolidated VMED O2 JV and VodafoneZiggo JV's Adjusted
EBITDA.
N.M. - Not Meaningful
(*)
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, earnings or loss from
continuing operations and other U.S. GAAP measures of performance.
For additional information on our Adjusted EBITDA measure,
including a reconciliation from earnings (loss) from continuing
operations, see the Glossary.
Three months ended
Increase/(decrease)
Nine months ended
Increase/(decrease)
Adjusted EBITDA less P&E
Additions
September 30,
September 30,
2021
2020
Reported %
Rebased %
2021
2020
Reported %
Rebased %
in millions, except %
amounts
Continuing operations:
UK(i)
$
—
$
269.9
(100.0
)
—
$
527.9
$
844.3
(37.5
)
1.1
Belgium
235.8
244.2
(3.4
)
(4.2
)
706.0
678.0
4.1
(2.0
)
Switzerland
195.9
96.4
103.2
13.1
497.8
257.6
93.2
3.0
Ireland
40.5
30.6
32.4
31.8
98.8
88.8
11.3
4.8
Central and Other
(74.3
)
(108.9
)
31.8
(12.9
)
(242.7
)
(303.8
)
20.1
11.4
Intersegment eliminations
(2.0
)
1.4
N.M.
N.M.
1.6
1.4
N.M.
N.M.
Total
$
395.9
$
533.6
(25.8
)
6.6
$
1,589.4
$
1,566.3
1.5
3.7
VMED O2 JV (ii)
$
507.8
$
—
N.M.
N.M.
$
692.5
$
—
N.M.
N.M.
VodafoneZiggo JV(ii)
$
383.5
$
346.2
10.8
9.1
$
1,008.4
$
908.1
11.0
4.4
______________________
(i)
Represents the Adjusted EBITDA
less P&E Additions of the UK JV Entities through the June 1,
2021 closing of the UK JV Transaction.
(ii)
Amounts reflect 100% of the 50:50
non-consolidated VMED O2 JV and VodafoneZiggo JV's Adjusted EBITDA
less P&E Additions.
N.M. - Not Meaningful
Leverage and Liquidity
- Total principal amount of debt and
finance leases: $15.2 billion for the Full Company
- Average debt tenor12: Over 7
years, with ~93% not due until 2027 or thereafter on a Full Company
basis
- Borrowing costs: Blended,
fully-swapped cost of debt was 3.5% for the Full Company
- Liquidity: $5.3 billion on a Full
Company basis, including (i) $0.8 billion of cash at September 30,
2021, (ii) $2.9 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 integration and synergy plans at Virgin Media O2 and at Sunrise
UPC, including the anticipated benefits thereof; expectations
regarding network and product plans, including the full fibre
overlay in the UK, the NetCo creation between Telenet and Fluvius
in Belgium, the deployment of Plume pods by VodafoneZiggo and the
FTTH overlay in Ireland, as well as the expected timing and
benefits of each such endeavor; expectations regarding our and our
businesses' financial performance, including Rebased Revenue,
Rebased Adjusted EBITDA, Rebased Adjusted EBITDA less P&E
Additions and Adjusted FCF; Virgin Media O2's and VodafoneZiggo's
respective guidance regarding anticipated shareholder distributions
of at least £300 million and €600 million, respectively; the
agreement to sell UPC Poland and the expected timing, proceeds and
benefits thereof; our Ventures strategy, including the expectations
relating to the AtlasEdge joint venture; our commitments and
aspirations with respect to ESG, including Net Zero, and DE&I
matters; our share buyback program, including expected buybacks of
$1.4 billion in 2021 and our commitment to repurchase 10% of our
shares in each of 2022 and 2023; 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 UK's exit from the E.U.; general
economic factors; our and our affiliates’ ability to obtain
regulatory approval and satisfy regulatory conditions associated
with acquisitions and dispositions; our and affiliates’ ability to
successfully acquire and integrate new businesses and realize
anticipated efficiencies from acquired businesses; the availability
of attractive programming for our and our affiliates’ video
services and the costs associated with such programming; our and
our affiliates’ ability to achieve forecasted financial and
operating targets; the outcome of any pending or threatened
litigation; the ability of our operating companies and affiliates
to access cash of their respective subsidiaries; the impact of our
operating companies' and affiliates’ future financial performance,
or market conditions generally, on the availability, terms and
deployment of capital; fluctuations in currency exchange and
interest rates; the ability of suppliers, vendors and contractors
to timely deliver quality products, equipment, software, services
and access; our and our affiliates’ ability to adequately forecast
and plan future network requirements including the costs and
benefits associated with network expansions; and other factors
detailed from time to time in our filings with the Securities and
Exchange Commission, including our most recently filed Form 10-K/A
and Forms 10-Q. These forward-looking statements speak only as of
the date of this release. We expressly disclaim any obligation or
undertaking to disseminate any updates or revisions to any
forward-looking statement contained herein to reflect any change in
our expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is
based.
About Liberty Global
Liberty Global (NASDAQ: LBTYA, LBTYB and LBTYK) is 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 million13 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 billion14, while our joint-ventures in the UK and the
Netherlands generate combined annual revenue of more than $17
billion15.
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.
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 Adjusted
EBITDA less P&E Additions for the three and nine months ended
September 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 nine months ended
September 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 nine months ended September 30, 2021,
(ii) exclude the revenue, Adjusted EBITDA and P&E additions in
our rebased amounts for the three and nine months ended September
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 nine
months ended September 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 nine months ended
September 30, 2020 equal to those included in our results for the
three and nine months ended September 30, 2021 and (iv) reflect the
translation of our rebased amounts for the three and nine months
ended September 30, 2020 at the applicable average foreign currency
exchange rates that were used to translate our results for the
three and nine months ended September 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 Adjusted EBITDA less P&E
Additions 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 Adjusted EBITDA less P&E
Additions 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 Adjusted EBITDA
less P&E Additions 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 September
30, 2020
Nine months ended September
30, 2020
Revenue
Adjusted EBITDA
Adjusted EBITDA less P&E
Additions
Revenue
Adjusted EBITDA
Adjusted EBITDA less P&E
Additions
in millions
Consolidated Liberty Global:
Acquisitions and Dispositions(i)
$
(1,068.0
)
$
(452.4
)
$
(177.6
)
$
(583.0
)
$
(368.2
)
$
(139.6
)
Foreign Currency
110.0
40.2
15.5
660.9
250.0
106.7
Total increase
$
(958.0
)
$
(412.2
)
$
(162.1
)
$
77.9
$
(118.2
)
$
(32.9
)
VodafoneZiggo JV(ii)
Foreign Currency
$
17.8
$
5.3
$
5.4
$
215.3
$
102.7
$
57.9
______________________
(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 Adjusted EBITDA less P&E Additions,
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 September 30, 2021, which includes
our (i) cash and cash equivalents, (ii) investments held under SMAs
and (iii) unused borrowing capacity at September 30, 2021:
Cash
Unused
and Cash
Borrowing
Total
Equivalents
SMAs(ii)
Capacity(iii)
Liquidity
in millions
Liberty Global and unrestricted
subsidiaries
$
495.6
$
2,942.6
$
—
$
3,438.2
UPC Holding
40.8
—
828.6
869.4
Telenet
224.8
—
642.1
866.9
VM Ireland
5.0
—
115.7
120.7
Total
$
766.2
$
2,942.6
$
1,586.4
$
5,295.2
______________________
(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 September 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(iii)
$
7,704.5
$
19.1
$
7,723.6
$
(68.2
)
$
7,655.4
Telenet
5,773.4
440.0
6,213.4
88.6
6,302.0
VM Ireland
1,041.3
—
1,041.3
—
1,041.3
Other
169.1
40.3
209.4
—
209.4
Total
$
14,688.3
$
499.4
$
15,187.7
$
20.4
$
15,208.1
______________________
(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 property and
equipment additions of our continuing operations for the indicated
periods and reconciles those additions to the capital expenditures
of our continuing operations that are presented in the condensed
consolidated statements of cash flows in our 10-Q.
Three months ended
Nine months ended
September 30,
September 30,
2021
2020
2021
2020
in millions, except %
amounts
Customer premises equipment
$
48.4
$
130.4
$
320.3
$
371.4
New build & upgrade
32.8
133.9
269.5
421.3
Capacity
49.6
65.4
192.9
186.5
Baseline
108.2
159.4
469.9
418.0
Product & enablers
123.6
140.8
431.2
442.6
Total P&E additions
362.6
629.9
1,683.8
1,839.8
Reconciliation of P&E additions to
capital expenditures:
Assets acquired under capital-related
vendor financing arrangements(i)
(52.7
)
(322.7
)
(599.6
)
(1,011.7
)
Assets acquired under capital leases
(8.3
)
(13.7
)
(27.8
)
(30.9
)
Changes in current liabilities related to
capital expenditures
(29.6
)
2.4
58.0
122.7
Total capital expenditures, net(ii)
$
272.0
$
295.9
$
1,114.4
$
919.9
P&E additions as % of revenue
19.1
%
22.1
%
20.1
%
22.3
%
______________________
(i)
Amounts exclude related VAT of
$1.9 million and $53.9 million for the three months ended September
30, 2021 and 2020, respectively, and $75.9 million and $172.5
million for the nine months ended September 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 Fixed Customer Relationship
The following table provides ARPU per fixed customer
relationship and percentage change from period to period on both a
reported and rebased basis for the indicated periods:
ARPU per Fixed Customer
Relationship
Three months ended September
30,
Increase/(decrease)
2021
2020
Reported %
Rebased %
Liberty Global
$
68.89
$
67.97
1.4
%
—
%
Ireland
€
60.59
€
60.59
—
%
—
%
Belgium (Telenet)
€
58.60
€
58.18
0.7
%
0.7
%
UPC Holding
€
57.72
€
57.09
1.1
%
(0.9
%)
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 September
30,
Increase/(decrease)
2021
2020
Reported %
Rebased %
Liberty Global:
Including interconnect revenue
$
29.19
$
18.24
60.0
%
(0.9
%)
Excluding interconnect revenue
$
26.01
$
15.08
72.5
%
(1.9
%)
Operating Data — September 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)
Continuing operations:
Belgium
3,395,300
2,035,000
1,719,600
79,400
1,694,600
1,774,000
1,122,400
4,616,000
2,952,700
Switzerland(v)
2,478,200
1,477,000
1,157,800
320,800
918,100
1,238,900
1,014,900
3,411,600
2,590,900
Ireland
952,000
433,400
388,200
—
310,400
310,400
282,800
981,400
126,700
Slovakia
631,400
189,500
146,400
32,300
137,100
169,400
89,000
404,800
—
Total continuing operations
7,456,900
4,134,900
3,412,000
432,500
3,060,200
3,492,700
2,509,100
9,413,800
5,670,300
Discontinued operations:
Poland
3,684,300
1,548,500
1,325,600
288,000
1,084,900
1,372,900
608,700
3,307,200
116,100
VodafoneZiggo JV(vi)
7,320,700
3,762,900
3,337,300
531,700
3,223,000
3,754,700
2,124,600
9,216,600
5,327,700
VMED O2 JV(vi)
15,546,300
5,715,600
5,536,400
13,331,600
31,864,600
Subscriber Variance Table —
September 30, 2021 vs. June 30, 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:
Continuing operations:
Belgium
6,400
(2,300
)
7,500
(10,900
)
(1,000
)
(11,900
)
(19,300
)
(23,700
)
(13,700
)
Switzerland(v)
8,300
(1,600
)
4,800
(5,800
)
4,400
(1,400
)
3,500
6,900
66,100
Ireland
2,300
(1,100
)
900
—
(8,300
)
(8,300
)
(5,500
)
(12,900
)
3,000
Slovakia
1,700
(400
)
600
100
100
200
400
1,200
—
Total continuing operations
18,700
(5,400
)
13,800
(16,600
)
(4,800
)
(21,400
)
(20,900
)
(28,500
)
55,400
Discontinued operations:
Poland
14,900
13,100
16,500
14,800
3,100
17,900
(10,200
)
24,200
10,700
Q3 2021 Liberty Global
Adjustments:
Belgium
—
—
—
—
—
—
—
—
9,500
Total adjustments
—
—
—
—
—
—
—
—
9,500
VodafoneZiggo JV(vi)
8,800
(22,000
)
(10,400
)
7,200
(30,100
)
(22,900
)
(52,400
)
(85,700
)
57,700
VMED O2 JV(vi)
69,900
38,500
42,300
50,500
506,500
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 48,100 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 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 213,700 subscribers who have requested and
received this service.
(iv)
In a number of countries, our
mobile subscribers receive mobile services pursuant to prepaid
contracts. As of September 30, 2021, our mobile subscriber count
included 487,500 and 336,300 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 operators (“partner networks”).
A partner network RGU is only recognized if there is a direct
billing relationship with the customer. At September 30, 2021,
Switzerland’s partner networks accounted for 113,000 Fixed-Line
Customer Relationships, 291,000 RGUs, which include 106,500
Internet Subscribers, 102,100 Video Subscribers and 82,400
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 466,000 homes passed by Switzerland’s partner networks at
September 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 broadband and postpaid mobile
subscribers in accordance with Liberty Global definitions.
2
The term "Full Company" includes
certain amounts that are presented as discontinued operations on
our September 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. We also present Full
Company Adjusted Free Cash Flow, consistent with the basis for our
full year 2021 Adjusted Free Cash Flow guidance.
3
Convenience translation based on
the August 31, 2021 USD/PLN spot rate of .2611.
4
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.
5
For the purpose of the Adjusted
EBITDA less P&E Additions sale price multiple calculation, UPC
Poland’s estimated 2021 Adjusted EBITDA less P&E Additions 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.
6
Value reflects certain fair value
adjustments and exclusions vs the $22.1 billion of investments
included in our 10-Q, predominantly excluding VMED O2,
VodafoneZiggo and SMAs, making certain fair value adjustments to
equity method investments and reflecting latest trading for public
securities as per October 22, 2021.
7
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.
8
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.
9
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 Adjusted EBITDA less P&E Additions
and (iii) certain integration related restructuring expenses that
are not included within Adjusted EBITDA or Adjusted EBITDA less
P&E Additions. 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.
10
This release includes the actual
US GAAP results for the VMED O2 JV for the three and nine months
ended September 30, 2021. The commentary and YoY growth rates
presented in this release are shown on an FX neutral basis
comparing the actual US GAAP results for Q3 2021 to the pro forma
US GAAP results for Q3 2020 as if the VMED O2 JV was created on
January 1, 2020. For more information regarding Virgin Media O2
including full IFRS disclosures, please visit their investor
relations page to access the VMED O2 JV's Q3 earnings release.
11
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 September 30, 2021 compliance
reporting requirements for our credit facilities, and assuming no
further changes from quarter-end borrowing levels, we anticipate
that €716.2 million ($828.6 million) of borrowing capacity will be
available under the UPC Holding Bank Facility, the full €555.0
million ($642.1 million) of borrowing capacity will be available
under the Telenet Credit Facility and the full €100.0 million
($115.7 million) of borrowing capacity will be available under the
VM Ireland Credit Facility, with €81.6 million ($94.4 million)
available to upstream. Our above expectations do not consider any
actual or potential changes to our borrowing levels or any amounts
loaned or distributed subsequent to September 30, 2021.
12
For purposes of calculating our
average tenor, total third-party debt excludes vendor
financing.
13
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.
14
Based off 2020 as reported
Liberty Global consolidated revenue as adjusted to (i) exclude the
revenue of the UK for the full year and (ii) include the estimated
full year revenue of Sunrise.
15
Based off 100% of the as reported
2020 NL JV revenue and estimated full year 2020 VMED O2 JV
revenue.
16
Our debt and net debt ratios are
prepared on a Full Company basis, which includes our continuing and
discontinued operations, and are defined as total debt and net
debt, respectively, divided by reported net earnings for the last
twelve months (reported LTM net earnings) and Adjusted EBITDA for
the last twelve months (LTM Adjusted EBITDA). Debt and net debt to
LTM Adjusted EBITDA are non-GAAP metrics. 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, as described below. For purposes of
these calculations, debt is measured using swapped foreign currency
rates, consistent with the covenant calculation requirements of our
subsidiary debt agreements. We have not presented leverage ratios
on a continuing operations basis as we believe that such
presentation would overstate our leverage and would not be
representative of the actual leverage ratios that we will report
once we complete the disposal of our discontinued operations. 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 debt and net debt to reported LTM
net earnings and LTM Adjusted EBITDA ratios as of and for the
twelve months ended September 30, 2021 (in millions, except
ratios):
Reconciliation of reported LTM net
earnings to adjusted LTM earnings:
Reported LTM net earnings
$
11,926.5
Transaction related adjustments(i)
(549.7
)
Adjusted LTM earnings
$
11,376.8
Reconciliation of adjusted LTM earnings
to LTM Adjusted EBITDA:
Adjusted LTM earnings
$
11,376.8
Income tax expense
380.4
Other expense, net
177.3
Gain on Atlas Edge JV Transactions
(213.7
)
Gain on UK JV Transaction
(10,790.7
)
Share of results of affiliates, net
181.8
Losses on debt extinguishment, net
90.6
Realized and unrealized gains due to
changes in fair values of certain investments and debt, net
(818.0
)
Foreign currency transaction losses,
net
491.2
Realized and unrealized gains on
derivative instruments, net
(300.6
)
Interest expense
606.8
Operating income
1,181.9
Impairment, restructuring and other
operating items, net
(71.4
)
Depreciation and amortization
1,724.2
Share-based compensation expense
273.4
LTM Adjusted EBITDA
$
3,108.1
Debt to reported LTM net earnings and
LTM Adjusted EBITDA:
Debt and finance lease obligations before
deferred financing costs, discounts and premiums
$
15,187.7
Principal related projected derivative
cash payments
20.4
Adjusted debt and finance lease
obligations before deferred financing costs, discounts and
premiums
$
15,208.1
Reported LTM net earnings
$
11,926.5
Debt to reported LTM net earnings
ratio
1.3
LTM Adjusted EBITDA
$
3,108.1
Debt to LTM Adjusted EBITDA ratio
4.9
Net Debt to reported LTM net earnings
and LTM Adjusted EBITDA:
Adjusted debt and finance lease
obligations before deferred financing costs, discounts and
premiums
$
15,208.1
Cash and cash equivalents and investments
held under separately managed accounts
(3,708.8
)
Adjusted net debt and finance lease
obligations before deferred financing costs, discounts and
premiums
$
11,499.3
Reported LTM net earnings
$
11,926.5
Net debt to reported LTM net earnings
ratio
1.0
LTM Adjusted EBITDA
$
3,108.1
Net debt to LTM Adjusted EBITDA ratio
3.7
______________________
(i)
Consistent with how we calculate
our leverage ratios under our debt agreements, we have adjusted our
debt and net debt to LTM Adjusted EBITDA ratios to (i) exclude the
Adjusted EBITDA of the UK JV Entities as a result of the formation
of the VMED O2 JV, (ii) include the pro forma pre-acquisition
Adjusted EBITDA of Sunrise and (iii) exclude the Adjusted EBITDA of
certain entities as a result of the formation of the Atlas Edge
JV.
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) from continuing operations 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.
Adjusted EBITDA less P&E
Additions: As used herein, Adjusted EBITDA less P&E
Additions (previously referred to as Operating Free Cash Flow or
"OFCF"), which is a non-GAAP measure, represents Adjusted EBITDA
less property and equipment additions. Adjusted EBITDA less P&E
Additions 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.
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. A reconciliation of
earnings (loss) from continuing operations to Adjusted EBITDA and
Adjusted EBITDA less P&E Additions is presented in the
following table:
Three months ended
Nine months ended
September 30,
September 30,
2021
2020
2021
2020
in millions
Earnings (loss) from continuing
operations
$
315.6
$
(985.6
)
$
12,889.2
$
(502.2
)
Income tax expense (benefit)
2.2
(165.5
)
444.2
(252.2
)
Other income, net
(8.2
)
(5.4
)
(25.6
)
(67.4
)
Gain on Atlas Edge JV Transactions
(213.7
)
—
(213.7
)
—
(Gain) adjustment to gain on UK JV
Transaction
347.3
—
(10,790.7
)
—
Share of results of affiliates, net
29.2
27.1
35.6
99.1
Losses on debt extinguishment, net
—
0.3
90.6
220.4
Realized and unrealized losses (gains) due
to changes in fair values of certain investments and debt, net
109.4
21.5
(373.3
)
399.0
Foreign currency transaction losses
(gains), net
(422.4
)
754.6
(857.6
)
836.3
Realized and unrealized losses (gains)
gains on derivative instruments, net
(199.3
)
717.5
(707.4
)
(200.4
)
Interest expense
140.9
279.3
748.1
873.5
Operating income
101.0
643.8
1,239.4
1,406.1
Impairment, restructuring and other
operating items, net
17.2
(16.7
)
68.4
46.5
Depreciation and amortization
582.3
432.0
1,744.8
1,710.1
Share-based compensation expense
58.0
104.4
220.6
243.4
Adjusted EBITDA
758.5
1,163.5
3,273.2
3,406.1
Property and equipment additions
(362.6
)
(629.9
)
(1,683.8
)
(1,839.8
)
Adjusted EBITDA less P&E Additions
$
395.9
$
533.6
$
1,589.4
$
1,566.3
Adjusted Free Cash Flow (FCF): We
define Adjusted Free Cash Flow as 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. Consistent
with the basis for our full year 2021 Adjusted Free Cash Flow
guidance, the following table provides a reconciliation of our Full
Company net cash provided by operating activities to Full Company
Adjusted Free Cash Flow for the indicated periods.
Three months ended September
30,
Nine months ended September
30,
2021
2020
2021
2020
in millions
Net cash provided by operating
activities
$
612.6
$
1,100.4
$
2,557.7
$
2,692.3
Cash payments for direct acquisition and
disposition costs
8.1
5.5
54.6
15.9
Expenses financed by an
intermediary(i)
187.2
731.1
1,670.6
2,005.6
Capital expenditures, net
(284.1
)
(310.9
)
(1,153.0
)
(960.5
)
Principal payments on amounts financed by
vendors and intermediaries
(203.5
)
(1,108.7
)
(2,060.3
)
(3,162.7
)
Principal payments on certain finance
leases
(16.0
)
(14.4
)
(48.0
)
(48.9
)
Adjusted FCF
$
304.3
$
403.0
$
1,021.6
$
541.7
_______________
(i)
For purposes of our condensed
consolidated statements of cash flows, operating 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 as our actual net cash available at
that time is not affected and subsequently deduct from our Adjusted
Free Cash Flow metric the related financing cash outflows when we
actually pay the financing intermediary, reflecting the actual
reduction to our cash available to service debt or fund new
investments.
ARPU: Average Revenue Per Unit is
the average monthly subscription revenue per average fixed 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 fixed 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 fixed 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 fixed 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 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 the VMED O2 JV networks in the UK as a
part of the Project Lightning network extension program. 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.
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
video, 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/20211103006204/en/
Investor Relations Michael Bishop +44 20 8483 6246 Steve
Carroll +1 303 784 4505 Amy Ocen +1 303 784 4528 Michael Khehra +44
78 9005 0979
Corporate Communications Molly Bruce +1 303 220 4202 Matt
Beake +44 20 8483 6428
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