Achieved all 2021 guidance targets including increased
Adjusted Free Cash Flow1; Distributable Cash Flow2 growth expected
to continue in 2022
Stable to growing revenue across the group with momentum into
2022 driven by strong aggregate3 broadband and postpaid mobile
growth
FMC penetration continues to rise with clear churn and NPS
benefits; cross-sell opportunities into 2022 with VOLT, Sunrise We,
and Telenet One
Executing on key network value creation opportunities, with
integration and synergy plans progressing well in the UK and
Switzerland
Value of Ventures increased to $3.5 billion4 or ~$6.70 per
share at year end
Exceeded buyback guidance with $1.6 billion of repurchases in
2021; reiterating commitment to purchase 10% of share count per
annum in 2022/23
Liberty Global plc today announced its Q4 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, “Our fourth quarter and full year results
demonstrated continued commercial momentum across our FMC
champions. Operationally, we delivered 306,000 aggregate broadband
and postpaid mobile subscribers during Q4 and over 1.0 million for
FY21 with our converged bundles leveraging our market-leading
broadband speeds and increasing 5G coverage. As we look at the
overall market in Europe, we see more tailwinds than headwinds,
including huge demand for connectivity, improved pricing power,
competition rationalizing and an improved regulatory
environment.
Executing on our synergy plans in Switzerland and the UK remains
a top priority and we are on track with the integrations in both
markets. Our focus on network development strategies across our
core operations continued throughout the quarter. In the UK, Virgin
Media O2 increased its 1Gbps footprint to reach all of its 15.6
million homes passed, while progressing its FTTP upgrade plans to
deploy a full fiber overlay across the entire HFC network by 2028.
Meanwhile in Belgium, Telenet recently launched a strategic tower
review with strong interest.
To extend Virgin Media O2's broadband leadership, Liberty Global
and Telefónica have initiated discussions with a number of
potential financial partners regarding an opportunity to
participate in a new network build joint venture. The focus of the
entity will be on building a full fiber network of up to 7 million
premises in new greenfield areas by the end of 2027. Virgin Media
O2 will commit to being an anchor tenant of this new network, with
its proven track record of achieving 30% penetration in new build
areas with project Lightning. The network will also be available to
other ISPs on a wholesale basis. As this will extend the company’s
gigabit reach to ~23m premises once completed, it provides Virgin
Media O2 with incremental growth opportunities by offering services
to a wider pool of customers and higher cross and upsell due to the
increased overlap of fixed and mobile services.
Our ventures portfolio is becoming an increasingly important
piece of our value creation strategy as we continue to invest in
technology, content and infrastructure businesses offering products
and services directly adjacent to our core operations. The
portfolio is now valued at $3.5 billion which represents a
year-on-year increase of $1.1 billion4. Key drivers include
Lacework, which closed one of the largest venture capital funding
rounds of the year in the U.S. last November, raising $1.3 billion
at a valuation of $8.3 billion, up substantially from its $1.1
billion valuation at the beginning of 2021, and Univision, which
closed its merger with Televisa in January 2022. Looking ahead, we
see a number of interesting infrastructure opportunities on the
horizon and will look at strategic options for our content
investments, while the technology portion of our Ventures portfolio
is expected to be largely self-funding going forward.
At the consolidated level, we delivered on all 2021 guidance
including Full Company5 Adjusted Free Cash Flow of $1.45 billion1,
which represented 37% YoY growth. We expect to continue growing
Distributable Cash Flow2 to $1.7 billion in 2022, an increase of
22% over 2021, supported by shareholder distributions from our
joint ventures in the U.K and the Netherlands, as well as an
expected recapitalization of Virgin Media O2 later in the year as
management further executes on its synergy plan. This growth is
expected despite our forecast for peak Costs to Capture6 spend in
both the U.K and Switzerland this year, as well as elevated capital
expenditures in Belgium and the Netherlands related to network
capacity.
Liberty Global’s balance sheet remains in great shape with $4.3
billion(i) of cash (pro forma for ~$600 million of net cash
proceeds expected from the sale of UPC Poland) and $5.9 billion of
total liquidity8 (pro forma for UPC Poland). We continue to believe
our shares offer very strong value at current prices and in our
robust share buyback program we repurchased $1.6 billion of our
shares in 2021, exceeding market expectations and buying back 10%
of our shares by year end. We look forward to executing on the
commitment to repurchase 10% of our shares outstanding in both 2022
and 2023."
(i) Including amounts held under separately managed accounts
(SMAs).
Q4 Operating Company Highlights
Sunrise UPC (Consolidated)
Sunrise UPC delivers record-high sales in competitive market,
achieving 2021 guidance; synergies realization ahead of
plan
Operating highlights: Strategic
integration plan towards becoming a national converged champion
remains on track with synergy realization ahead of plan. Despite
the continuation of an aggressive competitive environment,
record-high sales combined with stable low churn resulted in 8,000
broadband net additions in Q4, closing the year with great
momentum. Sales uptake in mobile postpaid with 49,000 net adds
across all brands. FMC share grew 3% in 2021 and has now reached
56%. Budget brand Yallo converged into a Full Telco operator.
Sunrise UPC will carry on utilizing a combination of its own
network, Swisscom's network and some new build in selected areas to
always provide the best products in the market.
Financial highlights: Reported
revenue was $824.5 million in Q4 2021, an increase of 1.0% on a
rebased8 basis YoY, primarily due to an increase in business
wholesale revenue partially offset by decreases in (i) prepay
business revenue and (ii) handset sales. Sunrise UPC's reported
Adjusted EBITDA was $297.8 million in Q4 2021. On a rebased basis,
Adjusted EBITDA decreased 0.5%, including $6 million of costs to
capture. Adjusted EBITDA less P&E Additions was $101.0 million
in Q4 on a reported basis. On a rebased basis, Adjusted EBITDA less
P&E Additions decreased 23.3% YoY, including the adverse impact
of $42 million of costs to capture.
Telenet (Consolidated)
Solid operational results in Q4 2021 and full year in line
with guidance
Operating highlights: Commercial
momentum continued in Q4 2021, resulting in the ninth quarter of
broadband growth with 6,000 net adds and 13,000 postpaid mobile
adds driven by a strong uptake of net new FMC customers on
Telenet's "ONE(Up)" bundles. Telenet continues to engage with
Fluvius to reach a formal agreement to create “the data network of
the future” through their joint fixed network infrastructure in
Flanders. Telenet also launched an external auction for the
potential sale of their mobile tower portfolio to enhance
shareholder value.
Financial highlights: Reported and
rebased revenue decreased 3.9% and increased 0.3%, respectively, to
$763.0 million in Q4. Revenue increased as a result of higher
mobile subscription revenue and an increase in broadband revenue
due to customer growth, partially offset by lower revenue from
business services. Reported and rebased Adjusted EBITDA decreased
2.5% and increased 1.6%, respectively, to $351.3 million in Q4. The
rebased Adjusted EBITDA growth was primarily due to the net effect
of (i) the aforementioned revenue impacts, (ii) a decrease in labor
costs and (iii) lower costs related to sales and marketing.
Reported and rebased Adjusted EBITDA less P&E Additions
decreased 8.8% and 5.1%, respectively, to $202.3 million in Q4.
VMO2 JV (Non-consolidated Joint Venture)
VMO2 JV continues to grow its customer base, discussions to
initiate a 7 million premises fiber network to be built with the
backing of a financial partner
Operating highlights: Strong demand
for premium connectivity and broadband speed continues, resulting
in 129,000 mobile postpaid net adds and 60,000 broadband net adds
in Q4, leading to the seventh consecutive quarter of growth in both
Project Lightning areas and VMO2's existing BAU. Implemented a 6.5%
average price increase in fixed starting in March. VOLT offer shows
strong growth boosting FMC penetration. 15.6 million premises are
now covered by 1Gbps speeds providing an average speed of 214Mbps,
4x the national average. Liberty Global and Telefonica have
initiated discussions with potential financial partners to
participate in a fiber network build joint venture of up to 7
million premises in new greenfield areas, to reach 80% of the
country by the end of 2027. The VMO2 JV will commit as an anchor
tenant for the project.
Financial highlights (in US GAAP):
Revenue decreased 0.6% YoY on an FX neutral pro forma basis9 to
$3,700.4 million, primarily driven by lower service revenue due to
the continued impact of a change in the distribution channel mix,
partially offset by an improvement in mobile revenue fueled by
increased upgrade activity following flagship handset launches in
late Q3. Adjusted EBITDA decreased 0.4% YoY on an FX neutral pro
forma basis to $1,125.3 million, including $41 million of opex
costs to capture, due to (i) the aforementioned decrease in
revenue, (ii) a normalization of operating costs as COVID
restrictions eased, (iii) increased investment in future growth
drivers of digitalization, product development and increased sales
and marketing expenses through the peak Q4 trading period and (iv)
higher programming costs. Adjusted EBITDA less P&E Additions
decreased 38.9% YoY on an FX neutral pro forma basis to $317.7
million, including $111 million of opex and capex costs to capture.
P&E Additions increased 32.4% YoY, as the company continued to
invest in its fixed and mobile infrastructure.
2022 guidance (in IFRS as guided by the
VMO2 JV)(ii): Expect to deliver mid-single-digit growth in
Adjusted EBITDA (as defined and reported by the VMO2 JV), supported
by improved top-line growth and the delivery of synergies, which
will ramp through the year. Expected opex and capex costs to
capture of over £300 million and P&E additions of around £2.1
billion as the company accelerates network investments. Cash
distribution to shareholders is anticipated to be £1.6 billion,
including cash from recapitalizations to maintain leverage at the
upper-end of the 4-5x range.
For more information regarding the VMO2 JV, including full IFRS
disclosures, please visit their investor relations page to access
the Q4 earnings release.
(ii) U.S. GAAP guidance for the VMO2 JV cannot be provided
without unreasonable efforts as the VMO2 JV reports under IFRS and
does not have US GAAP forecasts for all components of their IFRS
guidance. Quantitative reconciliations to net earnings/loss
(including net earnings/loss growth rates) for VMO2 JV's Adjusted
EBITDA guidance cannot be provided without unreasonable efforts as
they do not forecast (i) certain non-cash charges including; the
components of non-operating income/expense, depreciation and
amortization, and impairment, restructuring and other operating
items included in net earnings/loss. The items they do not forecast
may vary significantly form period to period.
VodafoneZiggo (Non-consolidated Joint Venture)
2021 guidance achieved and financial momentum
sustained
Operating highlights: Mobile
postpaid momentum continued, adding 45,000 subscribers in Q4. Added
1,600 converged households, driving improvements in churn. 1.2
million SmartWiFi Plume pods have been deployed across the customer
base to optimize connectivity experience. Over 70% of connected
households are now upgraded to 1Gbps internet speeds, on track to
reach the full base in 2022.
Financial highlights: Revenue
declined 2.8% on a reported basis and increased 1.1% on a rebased
basis to $1,185.8 million in Q4, marking the eleventh consecutive
quarter of rebased top-line growth. The increase in revenue was
primarily driven by (i) mobile customer base growth, (ii) roaming
and visitor revenue recovery and (iii) fixed ARPU growth, partially
offset by (a) a modest decline in mobile postpaid ARPU and (b) a
lower fixed customer base. Reported and rebased Adjusted EBITDA
increased 0.7% and 5.1%, respectively, to $552.2 million in Q4,
primarily driven by (1) the aforementioned strong revenue growth
and (2) disciplined cost control, partially offset by the impact of
certain benefits in the prior-year period. Adjusted EBITDA less
P&E Additions decreased 15.4% on a reported basis and 11.0% on
a rebased basis YoY to $266.7 million, driven by Adjusted EBITDA
growth partially offset by an increase in P&E additions.
Q4 Ventures / ESG Highlights
Ventures
Our Ventures portfolio valuation has appreciated materially in
the past few months reaching $3.5 billion in Q4, circa $1.1 billion
increase year-on-year. Key drivers for this valuation increase
include: higher valuation for Lacework and Plume following recent
financing rounds, Univision through the completion of its merger
with Televisa, and higher valuation of AtlasEdge following the
Digital Realty Trust deal. As an increasingly important part of our
overall value creation strategy, we continue to invest in
businesses with products or services adjacent to our core FMC
businesses. These investments are strategic, aligned to our overall
business and have the potential to create significant incremental
liquidity and value for us over the long run.
ESG
Our ESG agenda and commitment to embedding an ethos of
responsible, inclusive, and sustainable growth continues to
advance. Our efforts have delivered a number of accomplishments
across the business and here are some notable examples. In
December, Virgin Media Ireland’s emissions reduction targets were
recognized by the Science Based Targets initiative. In Holland,
VodafoneZiggo successfully issued its first sustainability bonds
worth €2.1 billion under the new Sustainable Finance Framework. The
company’s financing strategy is linked to its ESG “People, Planet,
Progress” objective of reducing CO2 emissions throughout the entire
chain (Scope 1, 2 and 3 emissions) by 50% by 2025 (vs 2018). In
Switzerland, Sunrise UPC launched its ESG strategy in Q4, including
its commitment to reducing greenhouse gas emissions (Scopes 1 and
2) produced directly and indirectly by the company to zero by 2030,
alongside plans to set a net zero target for Scope 3 by the end of
this year. The strategy also highlights “YouBelong!”, the company’s
framework supporting diversity, equity and inclusion. On the
product development front, Liberty Global’s Mini TV Box increased
its use of recycled plastics from 35% to 85%, demonstrating a
continuous commitment to make our products more sustainable and
energy efficient. Lastly, Liberty Global Ventures has recently
launched a renewable energy brand, Egg, offering a range of clean
technology solutions, including subscription-based electric vehicle
charging for homes and businesses.
Liberty Global Consolidated Q4 Highlights
- Q4 revenue decreased 42.0% YoY on a reported basis and
increased 1.9% on a rebased basis to $1,920.8 million
- Q4 earnings (loss) from continuing operations increased 162.4%
YoY on a reported basis to $638.3 million
- Q4 Adjusted EBITDA decreased 46.8% YoY on a reported basis and
4.4% on a rebased basis to $689.9 million
- Q4 property & equipment additions were 25.3% of revenue, as
compared to 23.1% in Q4 2020
- Balance sheet with $5.3 billion of total liquidity
- Comprised of $0.9 billion of cash, $2.8 billion of investments
held under SMAs and $1.6 billion of unused borrowing
capacity10
- Fully-swapped borrowing cost of 3.4% on a debt balance of $14.9
billion for the Full Company
Liberty Global (continuing operations)
Q4 2021
Q4 2020
YoY Change (reported)
YoY Change (rebased)
YTD 2021
YoY Change (reported)
YoY Change (rebased)
Customers
Organic customer additions (losses)
(5,200
)
34,400
(115.1
%)
19,400
(51.5
%)
Financial (in
millions, except percentages)
Revenue
$ 1,920.8
$ 3,311.7
(42.0
%)
1.9
%
$ 10,311.3
(10.7
%)
1.5
%
Earnings (loss) from continuing
operations
$ 638.3
$ (1,022.9
)
162.4
%
$ 13,527.5
987.0
%
Adjusted EBITDA
$ 689.9
$ 1,297.4
(46.8
%)
(4.4
%)
$ 3,963.1
(15.7
%)
(1.4
%)
P&E additions
$ 485.7
$ 763.8
(36.4
%)
$ 2,169.5
(16.7
%)
Adjusted EBITDA less P&E Additions
$ 204.2
$ 533.6
(61.7
%)
(30.9
%)
$ 1,793.6
(14.6
%)
(2.6
%)
Cash provided by operating activities
$ 950.0
$ 1,448.4
(34.4
%)
$ 3,364.0
(16.3
%)
Cash used by investing activities
$ (41.2
)
$ (4,684.8
)
99.1
%
$ (5,745.5
)
34.8
%
Cash provided (used) by financing
activities
$ (778.3
)
$ 741.3
(205.0
%)
$ (1,512.6
)
(236.9
%)
Full Company Adjusted FCF
$ 434.0
$ 503.7
(13.8
%)
$ 1,389.4
37.2
%
Customer Growth
Three months ended
Year ended
December 31,
December 31,
2021
2020
2021
2020
Organic customer net additions (losses)
by market
Switzerland
(100
)
(5,800
)
(1,200
)
(44,900
)
Belgium
(2,700
)
(1,000
)
(15,800
)
(14,500
)
UK(i)
—
43,100
41,700
102,000
Ireland
(1,600
)
(1,400
)
(3,400
)
(200
)
Slovakia
(800
)
(500
)
(1,900
)
(2,400
)
Total
(5,200
)
34,400
19,400
40,000
______________________
(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 was $638.3 million
and ($1,022.9 million) for the three months ended December 31, 2021
and 2020, respectively, and $13,527.5 million and ($1,525.1
million) for the year ended December 31, 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 VMO2 JV and VodafoneZiggo
JV, for the comparative periods and (ii) the percentage change from
period to period on both a reported and rebased basis. Consolidated
Adjusted EBITDA and Consolidated Adjusted EBITDA less P&E
Additions are non-GAAP measures. For additional information on how
these measures are defined and why we believe they are meaningful,
see the Glossary.
Three months ended
Year ended
December 31,
Increase/(decrease)
December 31,
Increase/(decrease)
Revenue
2021
2020
Reported %
Rebased %
2021
2020
Reported %
Rebased %
in millions, except %
amounts
Continuing operations:
Switzerland
$ 824.5
$ 642.9
28.2
1.0
$ 3,321.9
$ 1,573.8
111.1
0.5
Belgium
763.0
793.7
(3.9
)
0.3
3,065.9
2,940.9
4.3
0.7
UK(i)
—
1,619.6
(100.0
)
—
2,736.4
6,076.9
(55.0
)
2.6
Ireland
143.8
147.5
(2.5
)
1.6
550.0
513.7
7.1
3.5
Central and Other
190.0
115.0
65.2
13.2
648.7
461.9
40.4
3.7
Intersegment eliminations
(0.5
)
(7.0
)
N.M.
N.M.
(11.6
)
(21.8
)
N.M.
N.M.
Total
$ 1,920.8
$ 3,311.7
(42.0
)
1.9
$ 10,311.3
$ 11,545.4
(10.7
)
1.5
VMO2 JV(ii)
$ 3,700.4
$ —
N.M.
N.M.
$ 8,522.9
$ —
N.M.
N.M.
VodafoneZiggo JV(ii)
$ 1,185.8
$ 1,220.0
(2.8
)
1.1
$ 4,824.2
$ 4,565.4
5.7
1.9
______________________
(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 VMO2 JV and VodafoneZiggo JV's revenue.
N.M. - Not Meaningful
Three months ended
Increase/(decrease)
Year ended
Increase/(decrease)
December 31,
December 31,
Adjusted EBITDA
2021
2020
Reported %
Rebased %
2021
2020
Reported %
Rebased %
in millions, except %
amounts
Continuing operations:
Switzerland
$ 297.8
$ 254.4
17.1
(0.5
)
$ 1,208.7
$ 693.8
74.2
(1.8
)
Belgium
351.3
360.3
(2.5
)
1.6
1,481.8
1,413.4
4.8
1.2
UK(i)
—
633.9
(100.0
)
—
1,085.3
2,453.5
(55.8
)
(1.3
)
Ireland
57.9
58.8
(1.5
)
2.6
218.6
202.0
8.2
4.8
Central and Other
(17.3
)
(10.8
)
(60.2
)
N.M.
(33.1
)
(61.4
)
46.1
N.M.
Intersegment eliminations
0.2
0.8
N.M.
N.M.
1.8
2.2
N.M.
N.M.
Total
$ 689.9
$ 1,297.4
(46.8
)
(4.4
)
$ 3,963.1
$ 4,703.5
(15.7
)
(1.4
)
VMO2 JV(ii)
$ 1,125.3
$ —
N.M.
N.M.
$ 2,716.6
$ —
N.M.
N.M.
VodafoneZiggo JV(ii)
$ 552.2
$ 548.6
0.7
5.1
$ 2,265.6
$ 2,142.0
5.8
2.0
______________________
(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 VMO2 JV and VodafoneZiggo JV's Adjusted
EBITDA.
N.M. - Not Meaningful
Three months ended
Increase/(decrease)
Year ended
Increase/(decrease)
Adjusted EBITDA less P&E
Additions
December 31,
December 31,
2021
2020
Reported %
Rebased %
2021
2020
Reported %
Rebased %
in millions, except %
amounts
Continuing operations:
Switzerland
$ 101.0
$ 133.4
(24.3
)
(23.3
)
$ 598.8
$ 391.0
53.1
(2.7
)
Belgium
202.3
221.8
(8.8
)
(5.1
)
908.3
899.8
0.9
(2.7
)
UK(i)
—
262.0
(100.0
)
—
527.9
1,106.3
(52.3
)
1.1
Ireland
25.4
27.6
(8.0
)
(5.6
)
124.2
116.4
6.7
2.4
Central and Other
(124.7
)
(112.0
)
(11.3
)
(62.3
)
(367.4
)
(415.8
)
11.6
(4.1
)
Intersegment eliminations
0.2
0.8
N.M.
N.M.
1.8
2.2
N.M.
N.M.
Total
$ 204.2
$ 533.6
(61.7
)
(30.9
)
$ 1,793.6
$ 2,099.9
(14.6
)
(2.6
)
VMO2 JV (ii)
$ 317.7
$ —
N.M.
N.M.
$ 1,010.2
$ —
N.M.
N.M.
VodafoneZiggo JV(ii)
$ 266.7
$ 315.2
(15.4
)
(11.0
)
$ 1,275.1
$ 1,223.3
4.2
0.6
______________________
(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 VMO2 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: $14.9 billion for the Full Company
- Average debt tenor11: Over 7
years, with ~94% not due until 2027 or thereafter on a Full Company
basis
- Borrowing costs: Blended,
fully-swapped cost of debt was 3.4% for the Full Company
- Liquidity: $5.3 billion on a Full
Company basis, including (i) $0.9 billion of cash at December 31,
2021, (ii) $2.8 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 regarding our and
our businesses' financial performance, including Rebased Revenue,
Adjusted Free Cash Flow and Distributable Cash Flow at the
consolidated level, as well as the 2022 financial guidance provided
by our operating companies and joint ventures; anticipated
shareholder distributions from our joint ventures; expectations
with respect to the integration and synergy plans at Virgin Media
O2 and at Sunrise UPC, including the timing, costs and anticipated
benefits thereof; any recapitalization of Virgin Media O2;
expectations regarding network and product plans, including the
proposed new greenfield fiber network joint venture at Virgin Media
O2, the potential sale of mobile towers by Telenet, the full fiber
overlay in the U.K. and making 1Gbps internet available to all
VodafoneZiggo subscribers, the NetCo creation between Telenet and
Fluvius in Belgium and increasing our investments in infrastructure
through capital expenditures, as well as the expected timing, cost
and anticipated benefits of each such endeavor; the agreement to
sell UPC Poland and the expected timing, proceeds and benefit
thereof; our Ventures strategy and anticipated opportunities, as
well as the expectation of the technology portion being largely
self-funding going forward; our commitments and aspirations with
respect to ESG, including Net Zero and DE&I matters; our share
buyback program, including our commitment to repurchase 10% of our
outstanding shares in each of 2022 and 2023; the strength of our
and our affiliates' respective balance sheets (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 the 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. 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 previously announced, our Board of Directors authorized a
share repurchase program whereby we have committed to repurchasing
10 percent of our outstanding shares in each of 2021, 2022 and
2023. 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 pre-set 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 over 85 million3 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
$7.5 billion, while the VodafoneZiggo JV and the VMO2 JV generate
combined annual revenue of more than $19 billion.*
Liberty Global Ventures, our global investment arm, has a
portfolio of more than 75 companies and funds across content,
technology and infrastructure, including strategic stakes in
companies like ITV, Univision, Plume, Lionsgate and the Formula E
racing series.
* Revenue figures above are provided based on full year 2021
Liberty Global consolidated results (excluding revenue from the UK
JV Entities) and the combined as reported full year 2021 results
for the VodafoneZiggo JV and estimated US GAAP full year 2021
results for the VMO2 JV. For more information, please visit
www.libertyglobal.com.
Balance Sheets, Statements of Operations and Statements of
Cash Flows
The consolidated balance sheets, statements of operations and
statements of cash flows of Liberty Global are in our 10-K.
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 months and year ended
December 31, 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 months and year ended
December 31, 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 months and year ended December 31, 2021, (ii)
exclude from our rebased amounts the revenue, Adjusted EBITDA and
P&E additions of 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 months and year ended December 31, 2021, (iii) include in our
rebased results the revenue and costs for the temporary elements of
transitional and other services provided to the VMO2 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 equal to those
included in our results for the three months and year ended
December 31, 2021 and (iv) reflect the translation of our rebased
amounts at the applicable average foreign currency exchange rates
that were used to translate our results for the three months and
year ended December 31, 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 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 December
31, 2020
Year ended December 31,
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)
$ (1,402.3
)
$ (565.4
)
$ (235.7
)
$ (1,978.5
)
$ (933.5
)
$ (375.2
)
Foreign Currency
(25.3
)
(10.7
)
(2.5
)
594.6
249.3
117.4
Total
$ (1,427.6
)
$ (576.1
)
$ (238.2
)
$ (1,383.9
)
$ (684.2
)
$ (257.8
)
VodafoneZiggo JV(ii)
Foreign Currency
$ (47.6
)
$ (23.1
)
$ (15.7
)
$ 168.1
$ 78.9
$ 44.1
______________________
(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
VMO2 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(i) details the U.S. dollar equivalents of
our liquidity position at December 31, 2021, which includes our (i)
cash and cash equivalents, (ii) investments held under SMAs and
(iii) unused borrowing capacity:
Cash
Unused
and Cash
Borrowing
Total
Equivalents
SMAs(ii)
Capacity(iii)
Liquidity
in millions
Liberty Global and unrestricted
subsidiaries
$ 732.1
$ 2,801.3
$ —
$ 3,533.4
UPC Holding
19.3
—
814.4
833.7
Telenet
158.8
—
632.0
790.8
VM Ireland
0.4
—
113.9
114.3
Total
$ 910.6
$ 2,801.3
$ 1,560.3
$ 5,272.2
______________________
(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 December 31, 2021 U.S. dollar
equivalents 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)
$ 7,556.8
$ 19.1
$ 7,575.9
$ 243.3
$ 7,819.2
Telenet
5,717.3
431.4
6,148.7
34.8
6,183.5
VM Ireland
1,024.9
—
1,024.9
—
1,024.9
Other
141.7
39.3
181.0
—
181.0
Total
$ 14,440.7
$ 489.8
$ 14,930.5
$ 278.1
$ 15,208.6
______________________
(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 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 consolidated
statements of cash flows in our 10-K.
Three months ended
Year ended
December 31,
December 31,
2021
2020
2021
2020
in millions, except %
amounts
Customer premises equipment
$ 52.2
$ 138.5
$ 372.5
$ 509.9
New build & upgrade
43.2
150.7
312.7
572.0
Capacity
62.7
63.4
255.6
249.9
Baseline
179.0
228.8
648.9
646.8
Product & enablers
148.6
182.4
579.8
625.0
Total P&E additions
485.7
763.8
2,169.5
2,603.6
Reconciliation of P&E additions to
capital expenditures:
Assets acquired under capital-related
vendor financing arrangements(i)
(61.5
)
(327.9
)
(661.1
)
(1,339.6
)
Assets acquired under finance leases
(14.8
)
(17.8
)
(42.6
)
(48.7
)
Changes in current liabilities related to
capital expenditures
(115.8
)
(45.2
)
(57.8
)
77.5
Total capital expenditures, net(ii)
$ 293.6
$ 372.9
$ 1,408.0
$ 1,292.8
P&E additions as % of revenue
25.3
%
23.1
%
21.0
%
22.6
%
______________________
(i)
Amounts exclude related VAT of
$8.8 million and $54.1 million for the three months ended December
31, 2021 and 2020, respectively, and $84.7 million and $226.6
million for the year ended December 31, 2021 and 2020,
respectively, that were also financed under these arrangements.
(ii)
The capital expenditures that we report in
our 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 December
31,
Increase/(decrease)
2021
2020
Reported %
Rebased %
Liberty Global
$
67.75
$
69.95
(3.1
%)
(0.3
%)
Ireland
€
61.47
€
61.77
(0.5
%)
(0.5
%)
Belgium (Telenet)
€
59.18
€
58.65
0.9
%
0.9
%
UPC Holding
€
58.74
€
57.62
1.9
%
(1.8
%)
Mobile ARPU
The following tables provide ARPU per mobile subscriber and
percentage change from period to period on both a reported and
rebased basis for the indicated periods:
ARPU per Mobile
Subscriber
Three months ended December
31,
Increase/(decrease)
2021
2020
Reported %
Rebased %
Liberty Global:
Including interconnect revenue
$ 28.12
$ 20.80
35.2
%
2.5
%
Excluding interconnect revenue
$ 24.69
$ 18.22
35.5
%
(0.8
%)
Operating Data — December 31,
2021
Homes
Passed
Fixed-Line Customer
Relationships
Internet
Subscribers(i)
Video
Subscribers (ii)
Telephony
Subscribers(iii)
Total
RGUs
Total Mobile
Subscribers(iv)
Continuing operations:
Belgium
3,405,800
2,032,300
1,725,700
1,762,000
1,100,200
4,587,900
2,950,200
Switzerland(v)
2,484,400
1,476,900
1,166,200
1,239,800
1,021,200
3,427,200
2,610,300
Ireland
954,000
431,800
388,400
302,300
277,700
968,400
129,400
Slovakia
632,900
188,700
146,800
169,200
90,000
406,000
—
Total continuing operations
7,477,100
4,129,700
3,427,100
3,473,300
2,489,100
9,389,500
5,689,900
Discontinued operations:
Poland
3,703,400
1,569,400
1,350,500
1,397,200
598,600
3,346,300
121,300
VodafoneZiggo JV(vi)
7,328,000
3,738,800
3,328,200
3,729,800
2,064,700
9,122,700
5,365,400
VMO2 JV(vi)
15,649,900
5,768,300
5,596,800
13,390,200
32,276,800
Subscriber Variance Table —
December 31, 2021 vs. September 30, 2021
Homes
Passed
Fixed-Line Customer
Relationships
Internet
Subscribers(ii)
Video
Subscribers(i)
Telephony
Subscribers(iii)
Total
RGUs
Total Mobile
Subscribers(iv)
Organic Change Summary:
Continuing operations:
Belgium
10,500
(2,700
)
6,100
(12,000
)
(22,200
)
(28,100
)
(2,500
)
Switzerland(v)
6,200
(100
)
8,400
900
6,300
15,600
19,400
Ireland
2,000
(1,600
)
200
(8,100
)
(5,100
)
(13,000
)
2,700
Slovakia
1,500
(800
)
400
(200
)
1,000
1,200
—
Total continuing operations
20,200
(5,200
)
15,100
(19,400
)
(20,000
)
(24,300
)
19,600
Discontinued operations:
Poland
19,100
20,900
24,900
24,300
(10,100
)
39,100
5,200
VodafoneZiggo JV(vi)
7,300
(24,100
)
(9,100
)
(24,900
)
(59,900
)
(93,900
)
37,700
VMO2 JV(vi)
103,600
52,700
60,400
58,600
412,200
Footnotes for Operating Data and
Subscriber Variance Tables
(i)
In Switzerland, we offer a 10 Mbps
internet service to our Video Subscribers without an incremental
recurring fee. Our Internet Subscribers in Switzerland include
47,300 subscribers who have requested and received this
service.
(ii)
We have approximately 31,400 “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 Video Subscribers without an incremental recurring
fee. Our Telephony Subscribers in Switzerland include 215,400
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 December 31, 2021, our mobile subscriber count included
457,500 and 320,400 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 December 31, 2021,
Switzerland’s partner networks accounted for 113,100 Fixed-Line
Customer Relationships, 291,800 RGUs, which include 106,800
Internet Subscribers, 102,500 Video Subscribers and 82,500
Telephony Subscribers. Subscribers to our 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 464,900
homes passed by Switzerland’s partner networks at December 31,
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 the VMO2 JV's mobile subscriber counts
after a period of inactivity of nine months and three months,
respectively. The mobile subscriber count for the VMO2 JV includes
IoT connections, which are Machine-to-Machine contract mobile
connections including Smart Metering contract connections. Fixed
subscriber counts for the VodafoneZiggo JV include B2B
subscribers.
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.
Full year guidance achieved for Liberty
Global consolidated subsidiaries and the non-consolidated VMO2 JV
and VodafoneZiggo JV. We achieved our full year Adjusted Free Cash
Flow guidance of $1.45b based on guided FX rates of EUR/USD 1.23,
GBP/USD 1.36 and CHF/USD 1.12 and the as guided definition of
Adjusted Free Cash Flow. Prior to the fourth quarter of 2021, our
definition of Adjusted Free Cash Flow excluded cash payments for
third-party costs directly associated with successful and
unsuccessful acquisitions and dispositions. During the fourth
quarter of 2021, we changed our definition of Adjusted Free Cash
Flow to include these cash payments. Cash paid for third-party
costs directly associated with successful and unsuccessful
acquisition and dispositions was $80.5 million during 2021.
Adjusted Free Cash Flow is a non-GAAP measure, see the Glossary for
definitions.
2.
Distributable Cash Flow is defined as our
reported Adjusted FCF as re-defined during the fourth quarter of
2021 plus our estimated share of dividends we expect to receive
from JV recapitalization transactions.
3.
Represents aggregate consolidated and 50%
owned non-consolidated fixed and mobile subscribers. Includes
wholesale mobile subscribers of the VMO2 JV and B2B fixed
subscribers of the VodafoneZiggo JV.
4.
Amounts exclude the fair values for the
VMO2 JV, the VodafoneZiggo JV and SMAs and also reflect fair value
adjustments for certain investments that have a higher estimated
fair value than reported book value. The year over year increase in
our ventures portfolio includes a net increase from investments and
disposals of $0.3 billion and an increase in fair value of $0.8
billion.
5.
The term "Full Company" includes certain
amounts that are presented as discontinued operations on our
December 31, 2021 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.
6.
Distributable Cash Flow guidance reflects
FX rates of EUR/USD 1.14, GBP/USD 1.35, CHF/USD 1.06 and includes
~$100 million of litigation settlement proceeds in Switzerland.
7.
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.
8.
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.
9.
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.
10.
This release includes the actual US GAAP
results for the VMO2 JV for the three months and year ended
December 31, 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 Q4 2021 to the pro forma US GAAP results for Q4
2020 as if the VMO2 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 VMO2 JV's Q4 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 December 31, 2021 compliance reporting
requirements for our credit facilities, and assuming no further
changes from quarter-end borrowing levels, we anticipate that
€715.2 million ($814.4 million) of borrowing capacity will be
available under the UPC Holding Bank Facility, with €637.0 million
($725.3 million) available to upstream, the full €555.0 million
($632.0 million) of borrowing capacity will be available under the
Telenet Credit Facility and the full €100.0 million ($113.9
million) of borrowing capacity will be available under the VM
Ireland Credit Facility. Our above expectations do not consider any
actual or potential changes to our borrowing levels or any amounts
loaned or distributed subsequent to December 31, 2021.
12.
For purposes of calculating our average
tenor, total third-party debt excludes vendor financing.
13.
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 6 to the consolidated financial
statements included in our 10-K. 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 December 31, 2021 (in millions, except ratios):
Reconciliation of reported LTM net
earnings to adjusted LTM earnings:
Reported LTM net earnings
$ 13,610.1
Transaction related adjustments(i)
(519.2
)
Adjusted LTM earnings
$ 13,090.9
Reconciliation of adjusted LTM earnings
to LTM Adjusted EBITDA:
Adjusted LTM earnings
$ 13,090.9
Income tax expense
424.1
Other expense, net
113.8
Gain on Atlas Edge JV Transactions
(227.5
)
Gain on UK JV Transaction
(10,873.8
)
Share of results of affiliates, net
175.4
Losses on debt extinguishment, net
90.6
Realized and unrealized gains due to
changes in fair values of certain investments and debt, net
(735.0
)
Foreign currency transaction gains,
net
(984.0
)
Realized and unrealized gains on
derivative instruments, net
(755.9
)
Interest expense
577.2
Operating income
895.8
Impairment, restructuring and other
operating items, net
(100.7
)
Depreciation and amortization
2,003.6
Share-based compensation expense
279.4
LTM Adjusted EBITDA
$ 3,078.1
Debt to reported LTM net earnings and
LTM Adjusted EBITDA:
Debt and finance lease obligations before
deferred financing costs, discounts and premiums
$ 14,930.5
Principal related projected derivative
cash payments
278.1
Adjusted debt and finance lease
obligations before deferred financing costs, discounts and
premiums
$ 15,208.6
Reported LTM net earnings
$ 13,610.1
Debt to reported LTM net earnings
ratio
1.1
LTM Adjusted EBITDA
$ 3,078.1
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
$ 15,208.6
Cash and cash equivalents and investments
held under separately managed accounts
(3,711.9
)
Adjusted net debt and finance lease
obligations before deferred financing costs, discounts and
premiums
$ 11,496.7
Reported LTM net earnings
$ 13,610.1
Net debt to reported LTM net earnings
ratio
0.8
LTM Adjusted EBITDA
$ 3,078.1
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 VMO2 JV and (ii) 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 values 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 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"). Adjusted EBITDA less P&E Additions, which is a
non-GAAP measure, represents Adjusted EBITDA less property and
equipment additions on an accrual basis. Adjusted EBITDA less
P&E Additions is a meaningful measure because it provides (i) a
transparent view of Adjusted EBITDA that remains after our capital
spend, which we believe is important to take into account when
evaluating our overall performance and (ii) a comparable view of
our performance relative to other telecommunications companies. Our
Adjusted EBITDA less P&E Additions measure may differ from how
other companies define and apply their definition of similar
measures. Adjusted EBITDA less P&E Additions 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
consolidated statements of operations.
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
Year ended
December 31,
December 31,
2021
2020
2021
2020
in millions
Earnings (loss) from continuing
operations
$ 638.3
$ (1,022.9
)
$ 13,527.5
$ (1,525.1
)
Income tax expense (benefit)
29.1
(23.7
)
473.3
(275.9
)
Other income, net
(19.3
)
(8.8
)
(44.9
)
(76.2
)
Gain on Atlas Edge JV Transactions
(13.8
)
—
(227.5
)
—
Gain on UK JV Transaction
(83.1
)
—
(10,873.8
)
—
Share of results of affiliates, net
139.8
146.2
175.4
245.3
Losses on debt extinguishment, net
—
12.8
90.6
233.2
Realized and unrealized gains due to
changes in fair values of certain investments and debt, net
(361.7
)
(444.2
)
(735.0
)
(45.2
)
Foreign currency transaction losses
(gains), net
(466.9
)
573.0
(1,324.5
)
1,409.3
Realized and unrealized losses (gains) on
derivative instruments, net
84.5
1,079.1
(622.9
)
878.7
Interest expense
134.0
313.3
882.1
1,186.8
Operating income
80.9
624.8
1,320.3
2,030.9
Impairment, restructuring and other
operating items, net
(87.4
)
50.9
(19.0
)
97.4
Depreciation and amortization
608.9
517.1
2,353.7
2,227.2
Share-based compensation expense
87.5
104.6
308.1
348.0
Adjusted EBITDA
689.9
1,297.4
3,963.1
4,703.5
Property and equipment additions
(485.7
)
(763.8
)
(2,169.5
)
(2,603.6
)
Adjusted EBITDA less P&E Additions
$ 204.2
$ 533.6
$ 1,793.6
$ 2,099.9
Adjusted Free Cash Flow (Adjusted
FCF): We define Adjusted Free Cash Flow as net cash provided
by the operating activities of our continuing operations, plus
operating-related vendor financed expenses (which represents an
increase in the period to our actual cash available as a result of
extending vendor payment terms beyond normal payment terms, which
are typically 90 days or less, through non-cash financing
activities), less (i) cash payments in the period for capital
expenditures, (ii) principal payments on operating- and
capital-related amounts financed by vendors and intermediaries
(which represents a decrease in the period to our actual cash
available as a result of paying amounts to vendors and
intermediaries where we previously had extended vendor payments
beyond the normal payment terms), and (iii) principal payments on
finance leases (which represents a decrease in the period to our
actual cash available), each as reported in our consolidated
statements of cash flows with each item excluding any cash provided
or used by our discontinued operations. Prior to the fourth quarter
of 2021, our definition of Adjusted Free Cash Flow excluded cash
payments for third-party costs directly associated with successful
and unsuccessful acquisitions and dispositions. During the fourth
quarter of 2021, we changed our definition of Adjusted Free Cash
Flow to include these cash payments. Cash paid for third-party
costs directly associated with successful and unsuccessful
acquisition and dispositions was $80.5 million and $34.7 million
during 2021 and 2020, respectively. We believe 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 (a) service debt and (b) fund new
investment opportunities after consideration of all actual cash
payments related to our working capital activities and expenses
that are capital in nature whether paid inside normal vendor
payment terms or paid later outside normal vendor payment terms (in
which case we typically pay in less than 365 days). 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, that are not deducted to
arrive at these amounts. Investors should view adjusted free cash
flow as a supplement to, and not a substitute for, GAAP measures of
liquidity included in our consolidated statements of cash flows.
Further, our Adjusted Free Cash Flow may differ from how other
companies define and apply their definition of adjusted free cash
flow. 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
Year ended
December 31,
December 31,
2021
2020
2021
2020
Net cash provided by operating
activities
$ 991.3
$ 1,493.5
$ 3,549.0
$ 4,185.8
Operating-related vendor financing
additions(i)
129.0
764.4
1,799.6
2,770.1
Cash capital expenditures, net
(306.8
)
(389.7
)
(1,459.8
)
(1,350.2
)
Principal payments on operating-related
vendor financing
(132.1
)
(654.5
)
(1,424.0
)
(2,395.9
)
Principal payments on capital-related
vendor financing
(230.4
)
(688.8
)
(998.8
)
(2,110.1
)
Principal payments on finance leases
(17.0
)
(21.2
)
(76.6
)
(86.9
)
Adjusted FCF
$ 434.0
$ 503.7
$ 1,389.4
$ 1,012.8
_______________
(i)
For purposes of our consolidated
statements of cash flows, operating-related vendor financing
additions represent operating-related expenses financed by an
intermediary that are treated as constructive operating cash
outflows and constructive financing cash inflows when the
intermediary settles the liability with the vendor. When we pay the
financing intermediary, we record financing cash outflows in our
consolidated statements of cash flows. For purposes of our Adjusted
Free Cash Flow definition, we (i) add in the constructive financing
cash inflow when the intermediary settles the liability with the
vendor as our actual net cash available at that time is not
affected and (ii) subsequently deduct the related financing cash
outflow when we actually pay the financing intermediary, reflecting
the actual reduction to our cash available to service debt or fund
new investment opportunities.
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 mobile subscription 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.
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.
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 VMO2 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 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 subscribed to our video service, fixed-line
telephony service and broadband internet service, the customer
would constitute three RGUs. Total RGUs is the sum of Video,
Internet and Telephony Subscribers. RGUs generally are counted on a
unique premises basis such that a given premise 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.
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.
YoY: Year-over-year.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220217005815/en/
Investor Relations Michael Bishop +44 20 8483 6246 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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