Stable to growing revenue in Q1 across our FMC markets and
strong Adjusted EBITDA growth at Virgin Media O21, Sunrise UPC and
VodafoneZiggo
Executing well on commercial convergence strategies including
price adjustments at Virgin Media O2, Telenet and
VodafoneZiggo
Integration and synergy plans on track in the U.K. and
Switzerland
Completed the sale of UPC Poland at 9x EV/EBITDA and
announced the sale of Telenet's towers at 25x EV/EBITDAaL2
Accelerated stock buyback, having completed 50% of our
minimum annual commitment through May 6th including 35% in
Q1
Confirming all 2022 guidance targets
Liberty Global plc today announced its Q1 2022 financial
results.
CEO Mike Fries stated, “First, our thoughts go out to all those
impacted by the war in Ukraine. I’m very proud of our operations
and employees across Liberty Global for their devoted efforts to
support those in need. While we all hope for an end to the
violence, we are prepared to manage through the continued impact
the war is having on inflation. We are largely hedged on energy
costs and have been able to manage our pricing strategies to
minimize the net effect of higher costs.
At the same time, our first quarter financial results were
stable. Revenue was flat to up in all markets versus last year,
with strong Adjusted EBITDA growth in the U.K.1, Switzerland and
the Netherlands. Operationally, we delivered 100,000 aggregate3
broadband and postpaid mobile subscribers during the quarter driven
by our converged bundles, our market-leading broadband speeds and
increasing 5G coverage. Demand for connectivity remains high across
our European markets and, as noted above, we are seeing improved
pricing power as inflation picks up, competition rationalizes and
the regulatory environment eases.
Product innovation ramped up in the first quarter. In
Switzerland, we recently launched the Sunrise Moments loyalty
program, available to all customers, which provides reward packages
and exclusive experiences. Moreover, Sunrise UPC won the Mobile
Network Hotline Test 2022 demonstrating a consistent track record
in delivering best-in-class customer service. In the U.K., Stream
by Virgin Media was launched in April, offering customers an
IP-based entertainment service to aggregate TV channels, video apps
and streaming subscription services.
We remain committed to executing on our integration plans in
Switzerland and the U.K. and are on track with the synergy delivery
in both markets. We continue making progress with our network
development strategies across all of our FMC operations. In the
U.K., Project Lightning delivered 101,000 new premises taking our
cumulative U.K. Lightning footprint to 2.8 million homes, and we
expect to add over 500,000 new premises in 2022. Full fiber
deployment across VMO2’s entire fixed network is underway with
completion expected in 2028. Furthermore, 5G services are now
available in over 400 U.K. towns and cities and we expect to reach
50% population coverage by 2023. In Ireland, we are reinforcing our
focus on speed leadership with our full fiber upgrade program which
delivered over 40,000 premises in Q1.
Continuing our track record of smart and timely M&A
transactions, we completed the sale of UPC Poland on April 1st at
9x EV/EBITDA, generating ~$600 million of net proceeds. And in
Belgium we announced the sale of our 3,300 mobile towers to Digital
Bridge for €745 million, or 25x EV/EBITDAaL. We expect this
transaction to close in Q2.
We are reaffirming all of our original, full-year guidance
metrics, including $1.7 billion(i) of Full Company Distributable
Cash Flow4, representing an increase of 22% over 2021. This will be
supported through shareholder distributions from our joint ventures
in the U.K. and the Netherlands, as well as an additional
distribution from an expected recapitalization of Virgin Media O2
later this year. Liberty Global’s balance sheet remains strong with
$3.8 billion(ii) of cash (pro forma for ~$600 million of net cash
proceeds expected from the sale of UPC Poland) and $5.3 billion of
total liquidity5. We continue to see compelling value in our stock
at current price levels and completed 35% of our buyback commitment
through Q1, and 50% through May 6th.”
(i)
Quantitative reconciliations to cash flow
from operating activities for our Distributable Cash Flow 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 form period to period.
(ii)
Including amounts held under separately
managed accounts (SMAs).
Q1 Operating Company Highlights
Sunrise UPC (Consolidated)
Sunrise UPC achieves strong commercial performance in
broadband and postpaid adds, reiterates 2022 guidance; synergies
realization in line with plan
Operating highlights: Commercial
momentum continued in Q1 despite a persisting, albeit softening,
competitive environment. Strong sales combined with stable low
churn resulted in over 11,000 broadband net additions in Q1. Demand
for mobile postpaid remained solid, delivering 45,000 net adds in
the quarter across all brands. FMC penetration grew nearly 2% and
now reaches 57% of the broadband base. We continue to generate
value for our customer base through the launch of Sunrise Moments
loyalty program, which provides reward packages and exclusive
experiences, as well as the full service offering by our budget
brand Yallo.
Financial highlights: Revenue of
$821.4 million in Q1 2022 decreased 2.4% YoY on a reported basis
and increased 1.0% YoY on a rebased6 basis. The rebased increase
was largely driven by (i) an increase in business wholesale voice
revenue and (ii) volume driven growth in Yallo and SOHO, partially
offset by a decrease in fixed subscription revenue, primarily
driven by ARPU pressure on main brand offerings. Sunrise UPC's
Adjusted EBITDA was $301.2 million in Q1 2022, an increase of 7.0%
on a reported basis and 9.6% on a rebased basis, including $5
million of costs to capture7. Adjusted EBITDA less P&E
Additions of $157.7 million in Q1 increased 23.8% YoY on a reported
basis. On a rebased basis, Adjusted EBITDA less P&E Additions
increased 26.9%, including the adverse impact of $23 million of
costs to capture.
Telenet (Consolidated)
Operational results in Q1 2022 in line with guidance. Reached
binding agreement to sell the mobile tower business
Operating highlights: Continued
growth of FMC customer base in Q1 2022, driven by continued uptake
of Telenet's "ONE(Up)" bundles, while lower market flux impacted
net new subscriber growth, resulting in 3,000 broadband net adds
and 9,000 postpaid mobile net additions. Telenet entered into a
binding agreement with DigitalBridge Group, Inc. regarding the sale
of its mobile tower business, which is expected to close in Q2.
Telenet continues to progress on plans to develop “the data network
of the future” with Fluvius through its joint fixed network
infrastructure in Flanders.
Financial highlights: Reported and
rebased revenue decreased 6.3% and increased 0.7%, respectively, to
$724.4 million in Q1. The increase in rebased revenue was primarily
driven by (i) higher mobile subscription revenue and (ii) an
increase in business wholesale revenue, partially offset by lower
interconnect revenue. Reported and rebased Adjusted EBITDA
decreased 8.4% and 1.7%, respectively, to $340.4 million in Q1,
reflecting a difficult comparison against the same period last year
and the impact of higher inflation on staff-related expenses and
network operating costs. Reported and rebased Adjusted EBITDA less
P&E Additions decreased 13.4% and 7.2%, respectively, to $189.1
million in Q1.
VMO2 (Non-consolidated Joint Venture)
The VMO2 JV delivers a price rise while maintaining a flat
customer base. Focus on product innovation, network investment and
synergy realization
Operating highlights: The VMO2 JV
remains focused on innovation. Fixed and mobile price increases
were implemented to support revenue growth and continued investment
in the future as the demand for premium connectivity continues to
increase. The broadband base remained broadly flat with a 1,000 net
reduction in Q1, while mobile postpaid continued to show net adds
of 11,000 during the quarter. Average speed across the company's
broadband base has increased 24% YoY and now reaches 231Mbps, 4x
the national average. Launch of Stream for Virgin Media, a new
IP-based entertainment service offering customers a new way of
aggregating TV channels, video apps and streaming subscriptions,
delivered entirely through the company's broadband service.
Investment in the U.K.'s digital infrastructure continues through
Project Lightning, completion of FTTP upgrade pilots and the
extension of 5G services.
Financial highlights (in U.S.
GAAP): Revenue of $3,398.0 million was broadly flat YoY on
an FX neutral pro forma basis1. This performance was supported by
increased growth in mobile revenue, including a YoY increase in
handset revenue. Consumer fixed revenue remained broadly flat YoY
on an FX neutral pro forma basis, primarily as a result of a YoY
increase in fixed-line customers that was offset by a YoY decline
in fixed-line customer ARPU due to a change in customer mix.
Adjusted EBITDA increased 24.8%8 YoY on an FX neutral pro forma
basis to $1,395.3 million, including $14 million of opex costs to
capture and a one-off gain of approximately $233 million related to
the Q1 restructuring of the legacy O2 securitization structure,
representing the best full quarter since the formation of the VMO2
JV. This was due to cost savings following the migration of the
Virgin Mobile MVNO base from EE to Vodafone, lower sales
commissions and the flow through of cost synergies. Adjusted EBITDA
less P&E Additions increased 42.5%8 YoY on an FX neutral pro
forma basis to $736.0 million, including $59 million of opex and
capex costs to capture and the aforementioned one-off gain related
to the securitization restructuring. P&E Additions increased
9.6% YoY to $659.3 million, as the company continued to invest in
its fixed and mobile infrastructure.
For more information regarding the VMO2 JV, including full IFRS
disclosures, please visit their investor relations page to access
the Q1 earnings release.
VodafoneZiggo (Non-consolidated Joint Venture)
Commercial strategy execution delivers 2% Adjusted EBITDA
growth. Confirming 2022 guidance
Operating highlights: Successful
execution of the commercial strategy despite increased promotional
intensity in the market delivered 37,000 mobile postpaid additions,
passing the 5 million SIMs milestone while stabilizing mobile
postpaid ARPU. The market saw some increased levels of competition
around the Formula 1 season as well as increased promotional
activity by competitors impacting broadband RGUs, which declined by
17,000 in Q1. Continued progress in upgrading the network which now
offers Gigabit speed in almost 80% of the country and targeting
nationwide coverage by the end of the year. Price increase was
communicated to customers to support further investments to ensure
high quality connectivity through SmartWifi and 5G.
Financial highlights: Revenue
declined 7.1% on a reported basis and 0.3% on a rebased basis to
$1,130.0 million in Q1. The relatively flat rebased change was
primarily driven by (i) mobile postpaid customer base growth and
stable ARPU, (ii) fixed ARPU growth and (iii) B2B fixed customer
base growth, offset by B2C fixed customer base decline. Adjusted
EBITDA decreased 4.8% on a reported basis and increased 2.1% on a
rebased basis, to $537.8 million in Q1. The rebased increase was
primarily driven by disciplined cost control and lower programming
costs related to the Formula 1 rights loss and reduced charges for
other major sports rights. Adjusted EBITDA less P&E Additions
decreased 4.0% on a reported basis and increased 3.0% on a rebased
basis YoY to $317.4 million. The rebased increase was primarily
driven by Adjusted EBITDA growth.
Q1 Ventures / ESG Highlights
Ventures
Our Ventures portfolio valuation remained broadly flat during
the quarter and is currently valued at $3.4 billion9. The key
driver for this modest valuation decrease versus last quarter was
the fall in the value of our ITV stake. Overall relatively limited
investment of ~$80 million in the quarter. Our Ventures portfolio
remains an important part of our overall value creation strategy,
and we will continue to invest in businesses with products or
services adjacent to our core FMC businesses when opportunities
arise. As we have highlighted previously, all of 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
The first quarter continued to see significant emphasis on our
ESG agenda. We are working to ensure that as our business grows,
our environmental impact does not. As communicated with our recent
commitment to be a net zero company across Scopes 1 and 2 by 2030,
we are conducting analysis across our supply chain, network and
product roadmap for readiness to add Scope 3 to our decarbonization
plan. Within Scopes 1 and 2, our efforts to transition our vehicle
fleet to electric or hybrid models, procure renewable energy
sources for our operations and innovate through greener
technologies and best practices is already underway.
In our markets, VodafoneZiggo recently published its Impact
Report 2021, detailing performance across its People Planet
Progress objectives. The report highlights record-breaking 15% data
usage on the company’s networks, while simultaneously managing down
electricity consumption by 9% for the year. As in many of our
operations, VodafoneZiggo has employed various energy-saving
measures, including low-energy equipment and smarter cooling
systems, which is yielding sustainable results for our planet.
Additionally, VodafoneZiggo sources 100% green energy. Toward its
goal to help two million people progress digitally with technology
by 2025, Vodafone reported to have already reached 20% of this
target by the end of last year.
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. Our dedicated DE&I Council continues to work
with colleagues across the Liberty Global footprint to ensure
DE&I is embedded into everything we do, including the products
we design, the decisions we make, the communities in which we
operate and the relationships we have with our customers, suppliers
and shareholders. We are accelerating across our priorities of
inclusivity and representation in the workplace. Underpinning our
strategic pillars of Gender, LGBTQIA+, Ability, Race and Ethnicity,
and Multigenerational we have launched five Employee Resource
Groups (ERG). We have introduced our anti-bullying, discrimination
and harassment policy and with the clear insights we have gained
from our first ever inclusion survey we kicked off our conscious
inclusion educational and awareness program, in which next to
training we are engaging in small-group, impactful conversations
centering on inclusion in the workplace.
Liberty Global’s board of directors considers diversity in its
decisions making, and we added two new directors, with our board
now having three members with diverse backgrounds out of 11 members
as of the 2022 AGM. Our consideration of diversity at board levels
extends beyond our Liberty Global board as well. Our Belgian
operations are conducted by Telenet, a publicly traded company,
where we have a controlling interest of approximately 60% of the
outstanding shares. Telenet has nominated 11 directors for election
at its annual shareholder meeting in April 2022. Of these 11
directors, five have diverse backgrounds.
Liberty Global Consolidated Q1 Highlights
- Q1 revenue decreased 47.0% YoY on a reported basis and
increased 1.5% on a rebased basis to $1,853.3 million
- Q1 earnings from continuing operations decreased 24.4% YoY on a
reported basis to $1,075.7 million
- Q1 Adjusted EBITDA decreased 48.0% YoY on a reported basis and
increased 2.6% on a rebased basis to $684.3 million
- Q1 property & equipment additions were 20.6% of revenue, as
compared to 20.9% in Q1 2021
- Balance sheet with $4.7 billion of total liquidity
- Comprised of $0.9 billion of cash, $2.3 billion of investments
held under SMAs and $1.5 billion of unused borrowing
capacity10
- Fully-swapped borrowing cost of 3.4% on a debt balance of $14.7
billion for the Full Company11
Liberty Global (continuing operations,
unless otherwise noted)
Q1 2022
Q1 2021
YoY Change (reported)
YoY Change (rebased)
Customers
Organic customer net additions
(losses)
(3,900
)
33,100
(111.8
%)
Financial (in
millions, except percentages)
Revenue
$
1,853.3
$
3,499.9
(47.0
%)
1.5
%
Earnings from continuing operations
$
1,075.7
$
1,422.7
(24.4
%)
Adjusted EBITDA
$
684.3
$
1,316.2
(48.0
%)
2.6
%
P&E additions
$
381.9
$
731.0
(47.8
%)
Adjusted EBITDA less P&E Additions
$
302.4
$
585.2
(48.3
%)
4.9
%
Cash provided by operating activities
$
605.6
$
771.3
(21.5
%)
Cash used by investing activities
$
(39.4
)
$
(496.2
)
92.1
%
Cash used by financing activities
$
(655.7
)
$
(691.5
)
5.2
%
Full Company Adjusted FCF
$
137.2
$
76.1
80.3
%
Full Company Distributable Cash Flow
$
137.2
$
76.1
80.3
%
Customer Growth
Three months ended
March 31,
2022
2021
Organic customer net additions (losses)
by market
Switzerland
5,400
5,100
Belgium
(5,500
)
(4,500
)
U.K.(i)
—
28,400
Ireland
(1,400
)
2,600
Slovakia
(2,400
)
1,500
Total
(3,900
)
33,100
______________________
(i)
The 2021 amount represents organic net
additions of the U.K. JV Entities, which were contributed to the
VMO2 JV on June 1, 2021.
Earnings from Continuing Operations
- Earnings from continuing operations was $1,075.7 million and
$1,422.7 million for the three months ended March 31, 2022 and
2021, 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
Increase/(decrease)
March 31,
Revenue
2022
2021
Reported %
Rebased %
in millions, except %
amounts
Continuing operations:
Switzerland
$
821.4
$
841.8
(2.4
)
1.0
Belgium
724.4
772.7
(6.3
)
0.7
Ireland
127.8
136.1
(6.1
)
0.9
U.K.(i)
—
1,635.0
(100.0
)
—
Central and Other
181.4
120.3
50.8
8.9
Intersegment eliminations
(1.7
)
(6.0
)
N.M.
N.M.
Total
$
1,853.3
$
3,499.9
(47.0
)
1.5
VMO2 JV(ii)
$
3,398.0
$
—
N.M.
N.M.
VodafoneZiggo JV(ii)
$
1,130.0
$
1,217.0
(7.1
)
(0.3
)
______________________
(i)
The 2021 amount represents the revenue of
the U.K. JV Entities, which were contributed to the VMO2 JV on June
1, 2021.
(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)
March 31,
Adjusted EBITDA
2022
2021
Reported %
Rebased %
in millions, except %
amounts
Continuing operations:
Switzerland
$
301.2
$
281.6
7.0
9.6
Belgium
340.4
371.8
(8.4
)
(1.7
)
Ireland
50.9
47.6
6.9
14.9
U.K.(i)
—
640.4
(100.0
)
—
Central and Other
(7.4
)
(26.3
)
71.9
N.M.
Intersegment eliminations
(0.8
)
1.1
N.M.
N.M.
Total
$
684.3
$
1,316.2
(48.0
)
2.6
VMO2 JV(ii)
$
1,395.3
$
—
N.M.
N.M.
VodafoneZiggo JV(ii)
$
537.8
$
565.2
(4.8
)
2.1
______________________
(i)
The 2021 amount represents the Adjusted
EBITDA of the U.K. JV Entities, which were contributed to the VMO2
JV on June 1, 2021.
(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)
March 31,
Adjusted EBITDA less P&E
Additions
2022
2021
Reported %
Rebased %
in millions, except %
amounts
Continuing operations:
Switzerland
$ 157.7
$ 127.4
23.8
26.9
Belgium
189.1
218.4
(13.4
)
(7.2
)
Ireland
24.4
28.5
(14.4
)
(8.1
)
U.K.(i)
—
308.2
(100.0
)
—
Central and Other
(68.0
)
(98.4
)
30.9
(4.8
)
Intersegment eliminations
(0.8
)
1.1
N.M.
N.M.
Total
$ 302.4
$ 585.2
(48.3
)
4.9
VMO2 JV (ii)
$ 736.0
$ —
N.M.
N.M.
VodafoneZiggo JV(ii)
$ 317.4
$ 330.7
(4.0
)
3.0
______________________
(i)
The 2021 amount represents the Adjusted
EBITDA less P&E Additions of the U.K. JV Entities, which were
contributed to the VMO2 JV on June 1, 2021.
(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: $14.7 billion for the Full Company
- Average debt tenor12:
Approximately 7 years, with ~94% not due until 2028 or thereafter
on a Full Company basis
- Borrowing costs: Blended,
fully-swapped cost of debt was 3.4% for the Full Company
- Liquidity: $4.7 billion on a Full
Company basis, including (i) $0.9 billion of cash at March 31,
2022, (ii) $2.3 billion of investments held under SMAs and (iii)
$1.5 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; expectations of
price increases for our products or services; 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
potential sale of mobile towers by Telenet, the expected homes to
be added by Project Lightning in the U.K., the full fiber overlays
in the U.K. and Ireland, expected 5G coverage 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; our Ventures strategy and
anticipated opportunities; 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, Form 10-K/A and Forms 10-Q.
These forward-looking statements speak only as of the date of this
release. We expressly disclaim any obligation or undertaking to
disseminate any updates or revisions to any forward-looking
statement contained herein to reflect any change in our
expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is
based.
Share Repurchase Program
As 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 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, and currently provide 85 million
connections* across Europe and the United Kingdom. Our businesses
operate under some of the best-known consumer brands, including
Virgin Media-O2 in the U.K., VodafoneZiggo in The Netherlands,
Telenet in Belgium, Sunrise UPC in Switzerland, Virgin Media in
Ireland and UPC in Eastern Europe. Through our substantial scale
and commitment to innovation, we are building Tomorrow’s
Connections Today, investing in the infrastructure and platforms
that empower our customers to make the most of the digital
revolution, while deploying the advanced technologies that nations
and economies need to thrive.
Our consolidated businesses generate annual revenue of more than
$7.5 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, Televisa Univision, Plume, Lionsgate and the
Formula E racing series.
*
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.
**
Revenue figures above are provided based
on full year 2021 Liberty Global consolidated results (excluding
revenue from the U.K. JV Entities) and the combined as reported
full year 2021 results for the VodafoneZiggo JV and estimated U.S.
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 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 2022, we
have adjusted our historical revenue, Adjusted EBITDA and Adjusted
EBITDA less P&E Additions for the three months ended March 31,
2021 to (i) include the pre-acquisition revenue, Adjusted EBITDA
and P&E additions of entities acquired during 2021 in our
rebased amounts for the three months ended March 31, 2021 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
ended March 31, 2022, (ii) exclude from our rebased amounts the
revenue, Adjusted EBITDA and P&E additions of entities disposed
of during 2022 and 2021 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 ended March 31, 2022,
(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 ended
March 31, 2022 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 ended
March 31, 2022. We have reflected the revenue, Adjusted EBITDA and
P&E additions of these acquired entities in our 2021 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 2021
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 March 31,
2021
Revenue
Adjusted EBITDA
Adjusted EBITDA less P&E
Additions
in millions
Consolidated Liberty Global:
Acquisitions and Dispositions(i)
$
(1,547.4
)
$
(594.8
)
$
(271.8
)
Foreign Currency
(127.4
)
(54.2
)
(25.0
)
Total
$
(1,674.8
)
$
(649.0
)
$
(296.8
)
VodafoneZiggo JV(ii):
Foreign Currency
$
(84.1
)
$
(38.3
)
$
(3.4
)
______________________
(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 2022 and 2021 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 March 31, 2022, 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
$
610.4
$
2,332.6
$
—
$
2,943.0
UPC Holding
51.9
—
791.9
843.8
Telenet
180.5
—
615.0
795.5
VM Ireland
0.6
—
110.8
111.4
Total
$
843.4
$
2,332.6
$
1,517.7
$
4,693.7
______________________
(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
$1.5 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 March 31, 2022 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)
$
7,428.7
$
16.6
$
7,445.3
$
216.0
$
7,661.3
Telenet
5,646.5
412.7
6,059.2
(54.3
)
6,004.9
VM Ireland
997.4
—
997.4
—
997.4
Other
117.9
37.5
155.4
—
155.4
Total
$
14,190.5
$
466.8
$
14,657.3
$
161.7
$
14,819.0
______________________
(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
March 31,
2022
2021
in millions, except %
amounts
Customer premises equipment
$
71.2
$
147.3
New build & upgrade
22.8
137.5
Capacity
43.8
54.7
Baseline
134.8
221.6
Product & enablers
109.3
169.9
Total P&E additions
381.9
731.0
Reconciliation of P&E additions to
capital expenditures:
Assets acquired under capital-related
vendor financing arrangements(i)
(66.7
)
(320.0
)
Assets acquired under finance leases
(8.7
)
(9.6
)
Changes in current liabilities related to
capital expenditures
66.3
61.1
Total capital expenditures, net(ii)
$
372.8
$
462.5
P&E additions as % of revenue
20.6
%
20.9
%
______________________
(i)
Amounts exclude related VAT of $6.6
million and $41.3 million for the three months ended March 31, 2022
and 2021, 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 March
31,
Increase/(decrease)
2022
2021
Reported %
Rebased %
Liberty Global
$
66.47
$
69.39
(4.2
%)
(0.9
%)
Ireland
€
61.02
€
60.66
0.6
%
0.6
%
Belgium (Telenet)
€
58.75
€
58.90
(0.3
%)
(0.3
%)
UPC Holding
€
59.28
€
57.69
2.8
%
(2.2
%)
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 March
31,
Increase/(decrease)
2022
2021
Reported %
Rebased %
Liberty Global:
Including interconnect revenue
$
26.81
$
24.57
9.1
%
(3.8
%)
Excluding interconnect revenue
$
24.10
$
21.15
13.9
%
(2.2
%)
Operating Data — March 31,
2022
Homes Passed
Fixed-Line Customer
Relationships
Internet
Subscribers(i)
Video Subscribers (ii)
Telephony
Subscribers(iii)
Total RGUs
Total Mobile
Subscribers(iv)
Continuing operations:
Belgium
3,412,900
2,026,800
1,728,600
1,747,300
1,078,400
4,554,300
2,946,700
Switzerland(v)
2,489,700
1,482,300
1,177,600
1,243,400
1,028,200
3,449,200
2,647,100
Ireland
956,300
430,400
388,300
293,200
272,500
954,000
131,600
Slovakia
634,300
186,300
146,700
167,500
89,700
403,900
—
Total continuing operations
7,493,200
4,125,800
3,441,200
3,451,400
2,468,800
9,361,400
5,725,400
Discontinued operations:
Poland
3,713,600
1,582,200
1,367,600
1,411,500
588,200
3,367,300
133,500
VodafoneZiggo JV(vi)
7,336,600
3,714,900
3,311,700
3,705,300
1,993,900
9,010,900
5,389,400
VMO2 JV(vi)
15,749,700
5,760,200
5,595,800
13,228,000
32,595,000
Subscriber Variance Table —
March 31, 2022 vs. December 31, 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
7,100
(5,500
)
2,900
(14,700
)
(21,800
)
(33,600
)
(3,500
)
Switzerland(v)
5,300
5,400
11,400
3,600
7,000
22,000
36,800
Ireland
2,300
(1,400
)
(100
)
(9,100
)
(5,200
)
(14,400
)
2,200
Slovakia
1,400
(2,400
)
(100
)
(1,700
)
(300
)
(2,100
)
—
Total continuing operations
16,100
(3,900
)
14,100
(21,900
)
(20,300
)
(28,100
)
35,500
Discontinued operations:
Poland
10,200
12,800
17,100
14,300
(10,400
)
21,000
12,200
VodafoneZiggo JV(vi)
8,600
(23,900
)
(16,500
)
(24,500
)
(70,800
)
(111,800
)
31,300
VMO2 JV(vi)
99,800
(8,100
)
(1,000
)
(162,200
)
318,200
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 46,600 subscribers who have
requested and received this service.
(ii)
We have approximately 31,500 “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 213,200
subscribers who have requested and received this service.
(iv)
In a number of countries, our mobile
subscribers receive mobile services pursuant to prepaid contracts.
As of March 31, 2022, our mobile subscriber count included 449,500
and 308,100 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 March 31, 2022,
Switzerland’s partner networks accounted for 112,000 Fixed-Line
Customer Relationships, 290,000 RGUs, which include 106,000
Internet Subscribers, 102,000 Video Subscribers and 82,000
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 463,600
homes passed by Switzerland’s partner networks at March 31, 2022.
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
This release includes the actual U.S. GAAP
results for the VMO2 JV for the three months ended March 31, 2022.
The commentary and YoY growth rates presented in this release are
shown on an FX neutral basis comparing the actual U.S. GAAP results
for Q1 2022 to the pro forma U.S. GAAP results for Q1 2021 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 Q1
earnings release.
2
EBITDAaL represents Adjusted EBITDA as
further adjusted to include finance lease-related depreciation and
interest expense.
3
Represents aggregate consolidated and 50%
owned non-consolidated broadband and mobile subscribers. Includes
B2B fixed subscribers of the VodafoneZiggo JV.
4
Distributable Cash Flow is defined as
Adjusted Free Cash Flow, as re-defined during the fourth quarter of
2021, plus any dividends received from our equity affiliates that
are funded by activities outside of their normal course of
operations, including, for example, those funded by
recapitalizations (referred to as “Other Affiliate Dividends”).
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 received during Q1 2022.
5
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.
6
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.
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
The US GAAP YoY Adjusted EBITDA and
Adjusted EBITDA less P&E growth rates are significantly
impacted by the Q1 restructuring of the legacy O2 securitization
structure that was previously required to be accounted for as an
on-balance sheet structure under US GAAP, however, was accounted
for as an off-balance sheet structure under IFRS. As a result of
the Q1 restructuring, the securitization structure will now be
accounted for as an off-balance sheet structure under both US GAAP
and IFRS. As a result, the VMO2 JV recorded a one-off derecognition
gain of approximately £174 million ($233 million) in their Q1 US
GAAP financial results. This one-off gain impacted the US GAAP YoY
Adjusted EBITDA growth rate by approximately 19%. The remaining
difference in the US GAAP to IFRS Adjusted EBITDA growth rate of
3.5% is attributable to other recurring US GAAP to IFRS accounting
differences related lease accounting, the accounting for the VMO2
JV’s investment in CTIL and other miscellaneous adjustments, as
reconciled below.
Three months ended
March 31, 2022
in millions
Adjusted EBITDA:
IFRS transaction adjusted Adj EBITDA
(including costs to capture)
$
1,236.0
Transaction adjustments (i)
17.9
IFRS Adjusted EBITDA
1,253.9
IFRS/US GAAP adjustments (ii)
141.4
US GAAP Adjusted EBITDA
$
1,395.3
Property & equipment
additions:
IFRS property & equipment additions
(including costs to capture)
$
722.3
IFRS/US GAAP adjustments (iii)
(63.0
)
US GAAP property & equipment
additions
$
659.3
Adjusted EBITDA less property &
equipment additions:
IFRS transaction adjusted Adj EBITDA
(including costs to capture)
$
1,236.0
IFRS property & equipment additions
(including costs to capture)
722.3
IFRS transaction adjusted Adj EBITDA less
P&E additions
513.7
Transaction adjustments
17.9
IFRS/US GAAP adjustments (ii)(iii)
204.4
US GAAP Adjusted EBITDA less P&E
additions
$
736.0
______________________
(i)
In connection with the completion of the
formation of the VMO2 joint venture, the opening balance sheet of
the combined business was reported at its estimated fair value. As
such, certain amounts were adjusted to reflect the new basis of
accounting. These transaction adjustments therefore reverse the
effect of (i) deferred commissions and install costs write-off and
(ii) deferred revenue write-off.
(ii)
Adjusted EBITDA IFRS/US GAAP differences
primarily relate to (i) the VMO2 JV's investment in CTIL, (ii)
lease accounting, and (iii) certain handset securitization
transactions.
(iii)
Property & equipment additions IFRS/US
GAAP differences primarily relate to (i) the VMO2 JV's investment
in CTIL and (ii) lease accounting.
9
Amounts exclude 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 decrease in our ventures
portfolio from December 31, 2021 includes a net increase from
investments and disposals of ~$65 million and a net decrease from
changes in fair value and FX of ~$190 million.
10
Our aggregate unused borrowing capacity of
$1.5 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 March 31, 2022 compliance reporting
requirements for our credit facilities, and assuming no further
changes from quarter-end borrowing levels, we anticipate that
€714.6 million ($791.9 million) of borrowing capacity will be
available under the UPC Holding Bank Facility, with €294.1 million
($325.9 million) available to upstream, the full €555.0 million
($615.0 million) of borrowing capacity will be available under the
Telenet Credit Facility and the full €100.0 million ($110.8
million) of borrowing capacity will be available under the VM
Ireland Credit Facility, with €82.3 million ($91.2 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 March 31, 2022.
11
The term "Full Company" includes certain
amounts that are presented as discontinued operations on our March
31, 2022 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 and Full Company Distributable Cash Flow, consistent with the
basis for our full year 2022 Distributable Cash Flow guidance.
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
SMAs. 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 March 31, 2022 (in millions, except ratios):
Reconciliation of reported LTM net
earnings to adjusted LTM earnings:
Reported LTM net earnings
$
13,280.1
Transaction related adjustments(i)
(236.2
)
Adjusted LTM earnings
$
13,043.9
Reconciliation of adjusted LTM earnings
to LTM Adjusted EBITDA:
Adjusted LTM earnings
$
13,043.9
Income tax expense
379.1
Other expense, net
18.5
Gain on Atlas Edge JV Transactions
(227.5
)
Gain on U.K. JV Transaction
(10,873.8
)
Share of results of affiliates, net
(53.4
)
Losses on debt extinguishment, net
90.6
Realized and unrealized gains due to
changes in fair values of certain investments and debt, net
(446.8
)
Foreign currency transaction gains,
net
(1,382.4
)
Realized and unrealized gains on
derivative instruments, net
(513.7
)
Interest expense
551.6
Operating income
586.1
Impairment, restructuring and other
operating items, net
(135.9
)
Depreciation and amortization
2,359.5
Share-based compensation expense
278.5
LTM Adjusted EBITDA
$
3,088.2
Debt to reported LTM net earnings and
LTM Adjusted EBITDA:
Debt and finance lease obligations before
deferred financing costs, discounts and premiums
$
14,657.3
Principal related projected derivative
cash payments
161.7
Adjusted debt and finance lease
obligations before deferred financing costs, discounts and
premiums
$
14,819.0
Reported LTM net earnings
$
13,280.1
Debt to reported LTM net earnings
ratio
1.1
LTM Adjusted EBITDA
$
3,088.2
Debt to LTM Adjusted EBITDA ratio
4.8
Net Debt to reported LTM net earnings
and LTM Adjusted EBITDA:
Adjusted debt and finance lease
obligations before deferred financing costs, discounts and
premiums
$
14,819.0
Cash and cash equivalents and investments
held under separately managed accounts
(3,176.0
)
Adjusted net debt and finance lease
obligations before deferred financing costs, discounts and
premiums
$
11,643.0
Reported LTM net earnings
$
13,280.1
Net debt to reported LTM net earnings
ratio
0.9
LTM Adjusted EBITDA
$
3,088.2
Net debt to LTM Adjusted EBITDA ratio
3.8
______________________
(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 U.K. 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 less
P&E Additions and Property and Equipment Additions (P&E
Additions):
- 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 condensed
consolidated statements of operations.
- Adjusted EBITDA less P&E
Additions: We define Adjusted EBITDA less P&E Additions,
which is a non-GAAP measure, as 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
condensed consolidated statements of operations.
- 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 from continuing operations
to Adjusted EBITDA and Adjusted EBITDA less P&E Additions is
presented in the following table:
Three months ended
March 31,
2022
2021
in millions
Earnings from continuing operations
$
1,075.7
$
1,422.7
Income tax expense
81.2
165.2
Other income, net
(11.9
)
(10.1
)
Share of results of affiliates, net
(230.5
)
(1.7
)
Realized and unrealized losses (gains) due
to changes in fair values of certain investments, net
93.6
(194.6
)
Foreign currency transaction gains,
net
(575.0
)
(303.8
)
Realized and unrealized gains on
derivative instruments, net
(508.5
)
(811.2
)
Interest expense
134.2
334.7
Operating income
58.8
601.2
Impairment, restructuring and other
operating items, net
9.4
44.4
Depreciation and amortization
564.7
607.2
Share-based compensation expense
51.4
63.4
Adjusted EBITDA
684.3
1,316.2
Property and equipment additions
(381.9
)
(731.0
)
Adjusted EBITDA less P&E Additions
$
302.4
$
585.2
Adjusted Free Cash Flow (Adjusted FCF)
& Distributable Cash Flow:
- Adjusted FCF: We define Adjusted
FCF 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 condensed
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 FCF 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
FCF to include these cash payments. Cash paid for third-party costs
directly associated with successful and unsuccessful acquisition
and dispositions was $13.4 million and $13.2 million during the
three months ended March 31, 2022 and 2021, respectively.
- Distributable Cash Flow: We define
Distributable Cash Flow as Adjusted FCF, as re-defined during the
fourth quarter of 2021, plus any dividends received from our equity
affiliates that are funded by activities outside of their normal
course of operations, including, for example, those funded by
recapitalizations (referred to as “Other Affiliate
Dividends”).
We believe our presentation of Adjusted FCF and Distributable
Cash Flow, each of which is a non-GAAP measure, provides useful
information to our investors because these measures 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 FCF and
Distributable 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 FCF and Distributable Cash Flow as supplements to, and not
substitutes for, U.S. GAAP measures of liquidity included in our
condensed consolidated statements of cash flows. Further, our
Adjusted FCF and Distributable Cash Flow may differ from how other
companies define and apply their definition of Adjusted FCF or
other similar measures. Consistent with the basis for our full year
2022 Distributable Cash Flow guidance, the following table provides
a reconciliation of our Full Company net cash provided by operating
activities to Full Company Adjusted FCF and Full Company
Distributable Cash Flow for the indicated periods.
Three months ended
March 31,
2022
2021
in millions
Net cash provided by operating
activities
$
656.7
$
821.2
Operating-related vendor financing
additions(i)
140.2
852.3
Cash capital expenditures, net
(388.6
)
(475.8
)
Principal payments on operating-related
vendor financing
(211.7
)
(659.5
)
Principal payments on capital-related
vendor financing
(41.4
)
(442.4
)
Principal payments on finance leases
(18.0
)
(19.7
)
Full Company Adjusted FCF
137.2
76.1
Other affiliate dividends
—
—
Full Company Distributable Cash Flow
$
137.2
$
76.1
_______________
(i)
For purposes of our condensed 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
condensed consolidated statements of cash flows. For purposes of
our Adjusted FCF 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 U.K. 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/20220510006267/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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