Q2 rebased OCF Growth of 4% in Europe
Rebased OCF Growth of 13% for LiLAC Group in Q2
Liberty 3.0 Expected to Meaningfully Enhance Growth
Prospects
All Full-Year 2015 Guidance Targets Confirmed
Liberty Global plc (NASDAQ: LBTYA, LBTYB, LBTYK, LILA and
LILAK), today announces financial and operating results1 for the
three months ("Q2") and six months ("YTD" or "H1") ended June 30,
2015 for the Liberty Global Group and the LiLAC Group2.
Key highlights for the consolidated operations of Liberty
Global plc:
- Organic RGU3 additions of 207,000 YTD,
including 138,000 in Q2
- Rebased4 revenue growth of 3% for both
YTD and Q2, reaching $9.1 billion YTD
- YTD OCF5 of $4.3 billion, reflecting
YTD and Q2 rebased growth of 3% and 4%, respectively
- Free Cash Flow ("FCF")6 of $592 million
in Q2, increasing YTD total FCF to $922 million
Operating and financial highlights for the Liberty Global
Group7, our European business:
- Organic RGU additions of 95,000 in Q2,
negatively impacted by Dutch performance
- Unitymedia regained RGU momentum with
92,000 net additions in Germany
- Substantial year-over-year improvement
in RGU performance across all products in U.K.
- RGU loss of 87,000 at Ziggo in the
Netherlands, expect H2 performance to improve
- Initiated new build program in
Manchester (150,000 HP) and new build trials in Germany
- EuroDocsis 3.1 testing to begin in H2
2015, expected to result in broadband speeds of 1Gbps+
- Rebased revenue growth of 3% and
rebased OCF growth of 4% in Q2
- 4% rebased revenue growth in the U.K.
and 6% growth in both Germany & Belgium
- OCF performance fueled by 12% rebased
growth in Belgium and 8% in the U.K./IE
- Balance sheet geared at 5.0x net
leverage8 with over $4.2 billion in total liquidity9
- FCF of $539 million in Q2 and $894
million YTD
Operating and financial highlights for the LiLAC
Group10:
- Added 43,000 organic RGUs and increased
customer relationships by 14,000 in Q2
- Delivered Q2 rebased revenue growth of
7%, our best quarterly result in two years
- Rebased OCF up 13% to $128 million in
Q2, resulting in margin expansion of 240 bps to 41%
- Chile and Puerto Rico with Q2 rebased
OCF growth of 14% and 12%, respectively
- Completed acquisition of Choice in
Puerto Rico in June, creating island-wide scale
- Finished Q2 with net leverage of 3.5x,
including over $230 million of cash
CEO Mike Fries commented, "Subscriber additions and OCF growth
each accelerated in Q2, with most of our markets delivering
improved sequential performance as compared to Q1. Strong demand
for our triple- and quad-play bundles continues to support our
results despite difficulties in the Netherlands, which continued to
face competitive and integration challenges. We have taken measures
to improve our results in that market and our H2 OCF growth should
benefit from the positive impact of Ziggo synergies. Despite the
headwinds in the Netherlands, we are confirming all of our 2015
guidance targets.”
"Rebased revenue growth of 3% for the Liberty Global Group in Q2
was underpinned by strong top line performances in the U.K.,
Germany and Belgium. Operating leverage and strong cost controls
drove 4% rebased OCF growth in Europe, despite the challenges in
Holland. We expect OCF growth in Europe to continue ramping in the
second half of the year based on our expectation for significantly
improved net add numbers, accelerating rebased revenue growth from
our residential and B2B11 services and our continued focus on
controlling costs.”
"In early July we launched our LiLAC tracking stock, which
tracks our market-leading cable assets in Chile and Puerto Rico.
Investors can now directly participate in the economic performance
of VTR and Liberty Puerto Rico, which together reported 7% rebased
revenue growth, 13% rebased OCF growth and 43,000 organic RGU
additions in Q2. We see LiLAC as a great platform for future
M&A opportunities given the fragmented nature of media assets
in this region of the world and along these lines we recently
closed the Choice acquisition in Puerto Rico. Over the medium term,
we expect LiLAC to generate mid- to high-single-digit rebased OCF
growth."
“We recently finalized the blueprint for our Liberty 3.0
program, and we're excited about the substantial growth opportunity
that lies ahead of us. This transformational effort is expected to
enhance our revenue and OCF growth over the next several years as
we unlock efficiencies and reinvest the majority of those savings
to drive even faster revenue and operating cash flow growth. The
3.0 initiative will involve a number of changes to our operating
model and organization, and we are confident in our ability to
deliver high-single-digit OCF growth over the medium term.”
"We have continued to make steady progress with our capital
structure, refinancing nearly $4 billion of debt in Q2 after a very
active first quarter. As a result, our average tenor at quarter end
has been extended to nearly eight years, at a blended,
fully-swapped interest cost of 5.4%. In terms of our repurchase
activity, we bought nearly $500 million of our equity during Q2,
increasing our total to over $900 million of buybacks during the
first six months of the year. As a result, we remain on track to
return $3 billion of capital to shareholders through stock
repurchases over the next 18 months."
Subscriber Statistics - Liberty Global Group
At the end of Q2 2015, we provided our 25.7 million unique
customers with 52.9 million subscription services ("RGUs") across
our footprint of 48.6 million homes passed in Europe. On a product
level, our RGU base for the Liberty Global Group consisted of 22.8
million video, 16.4 million broadband internet and 13.7 million
telephony subscriptions. In terms of quarterly net additions, we
increased our RGUs by 115,000 during Q2, including 95,000 organic
RGU additions and small in-market acquisitions in Romania. At the
end of Q2 2015, over 60% or 15.7 million of our customers took more
than one product from us. This represents a bundling ratio of
nearly 2.1, providing ample headroom for growth, including in
Germany where the average customer subscribes to 1.7 products.
Geographically, our Q2 organic additions consisted of 43,000
RGUs in Western Europe and 52,000 in Central and Eastern Europe
("CEE"). While the RGU performance in our CEE region more than
doubled versus Q2 2014, the results in Western Europe were
particularly impacted by a weak performance in the Netherlands, as
Ziggo lost 87,000 RGUs during the quarter. We experienced both
lower sales and higher churn in the Dutch market, due in part to
continued operational challenges associated with our network and
product harmonization and integration work. In addition, our Q2 RGU
performance in Holland was adversely impacted by the continued
competitive environment, in combination with price increases across
our existing customer base and acquisition portfolio. We have taken
additional measures to improve our Dutch operational performance,
including a quality improvement program and the launch of a summer
promotion in mid-July, centered around Horizon TV.
In Germany, the Q2 results of Unitymedia rebounded with 92,000
RGU additions in Q2, supported by reduced churn across all three
products, as compared to our Q1 RGU performance, which was partly
impacted by a price increase for 1.3 million of our broadband
internet subscribers. Virgin Media added 2,000 RGUs in the
seasonably slow second quarter, marking its best Q2 RGU performance
in five years. This improvement in the U.K. was driven by our
superior products and bundles, resulting in our fourth consecutive
quarter of record low churn. At UPC Cablecom in Switzerland, we
grew organic RGUs by 16,000 in Q2 versus 9,000 RGU additions in Q2
2014. Rounding out the top five Western European markets, our
Belgian operation added 14,000 organic RGUs, which was flat
sequentially, but below the prior-year period.
From a product perspective, broadband internet remained the
primary source of our organic subscriber growth in Europe with
110,000 RGU additions, driven largely by our German and Swiss
operations, with 56,000 and 16,000 adds, respectively. The 51,000
year-over-year decrease in broadband internet additions, as
compared to Q2 2014, was mainly attributable to Germany (26,000
RGUs), following the implementation of our higher-priced product
portfolio in March, and the Netherlands (24,000 RGUs), impacted by
the aforementioned challenges. Of particular note, we added 7,000
broadband RGUs at Virgin Media, its best Q2 result since 2010.
Moving to our telephony performance, we added 99,000 new fixed-line
telephony subscribers in Q2 2015, which is slightly below Q2 2014,
as improvements in Switzerland and the U.K. were more than offset
by declines in the Netherlands and Ireland.
Our video attrition of 113,000 organic RGUs in Europe during Q2
2015 was higher than the 82,000 RGUs we lost in the comparable
prior-year period. The negative variance was primarily a result of
our Dutch business, which lost 45,000 more video subscribers than
in the prior-year period. When excluding the Netherlands for both
periods, video attrition improved by 13,000 RGUs year-over-year,
primarily driven by improvements in Romania, Poland and the U.K. We
ended the second quarter with 14.0 million enhanced video
subscribers, representing enhanced video penetration12 of 64%, and
8.0 million basic video subscribers. In terms of our innovative
Horizon TV and TiVo products, we converted over 230,000 video
customers into next-generation TV subscribers during Q2, of which
Horizon TV contributed over 150,000 and TiVo 80,000, bringing the
combined base to nearly four million. Multi-screen services have
now been launched in all of our European markets under the brands
"Virgin TV Anywhere" in the U.K., "Yelo TV" in Belgium and "Horizon
Go" in all of our other European markets. These multi-screen
services are typically included in our bundles, offering easy
access to catch-up and video-on-demand content as well as over 100
live TV channels, of which the vast majority are also available
out-of-home.
With respect to our wireless business in Europe, we finished Q2
2015 with 4.5 million mobile subscribers13, which represents an
increase of 84,000 during the quarter. This growth was driven by
quarterly additions in all of our Western European markets,
including increases of 29,000, 20,000 and 14,000 in Belgium, the
Netherlands and Germany, respectively. Virgin Media added 7,000
mobile subscribers in the quarter, including 36,000 postpaid
additions, driven by our successful Freestyle14 proposition. This
offer enables customers to purchase a handset independent of the
mobile airtime contract, and will be introduced in other European
markets later this year. Other developments include mobile trials
in Ireland, which are currently underway, and preparations for 4G
launches in Switzerland and the Netherlands later in the year.
Revenue - Liberty Global Group
Liberty Global Group revenue of $4.3 billion and $8.5 billion
for the three and six months ended June 30, 2015, respectively, was
slightly down as compared to the corresponding prior-year periods.
For both periods, the reported declines in revenue were driven by
negative foreign currency ("FX") movements related to the
strengthening of the U.S. dollar against all of our functional
currencies, largely offset by the inclusion of Ziggo and, to a
lesser extent, organic revenue growth. Adjusted for acquisitions,
dispositions and FX, our operations attributed to the Liberty
Global Group achieved year-over-year rebased revenue growth of 3%
during each of the Q2 and YTD 2015 periods, in line with both
prior-period results in 2014.
Cable subscription revenue remains the primary driver of overall
rebased revenue growth. The two other key contributors to our
rebased growth were mobile (including interconnect and handset
sales) and B2B (including SOHO), which delivered rebased revenue
growth rates in Q2 of 15%15 and 6%, respectively.
On a year-to-date basis, our 3% rebased growth for the Liberty
Global Group included the net effects of certain non-recurring and
non-operational items, the most significant of which were: (i) the
$63 million negative impact of increased VAT obligations, including
$55 million in the U.K., (ii) the $41 million net positive impact
from the upfront recognition of revenue in connection with our
Freestyle mobile promotion in the U.K., (iii) the $13 million
favorable impact of higher amortization of deferred upfront B2B
fees in the U.K. and (iv) the $12 million negative impact of a
favorable revenue settlement in Germany during Q1 2014. In Q2, the
upfront recognition of revenue in connection with our Freestyle
mobile proposition in the U.K. was largely offset by the negative
impact of higher VAT obligations.
From a geographic perspective, Western Europe delivered 3%
rebased revenue growth for Q2, while our operations in the CEE
region posted 1% rebased revenue growth, which represents an
improvement for CEE versus the flat rebased revenue result in the
prior-year period.
Our Q2 performance in Western Europe, which represents over 90%
of the Liberty Global Group's revenue, was led by our operations in
Belgium and Germany, each delivering 6% rebased revenue growth,
primarily driven by an increase in subscribers, higher ARPU16 and,
in the case of Telenet, increases in mobile subscription and B2B
revenue. Of particular note, Virgin Media in the U.K. delivered 4%
rebased revenue growth, which helped our U.K./Ireland segment post
rebased revenue growth of 3%. Our U.K. result was driven primarily
by increases in cable subscription revenue, due largely to
subscriber growth, ARPU improvements that were supported by price
rises and higher revenue from mobile handset sales. These positive
factors more than offset the aforementioned impacts of increased
VAT obligations. Meanwhile, our operation in Switzerland/Austria
posted 3% rebased revenue growth in Q2, mainly supported by an
increase in cable subscription revenue that was driven by ARPU and
subscriber growth.
Finally, our revenue results in Western Europe were partially
offset by a weak quarter for our business in the Netherlands, which
experienced a 2% rebased revenue decline as a result of the
aforementioned challenges. Given the lack of recent subscriber
growth and the current competitive environment, we expect the
second half of 2015 to remain challenging in the Netherlands,
especially with respect to rebased revenue growth. Our new
promotions highlight the value of our bundles and brand, and we
will continue to invest in product development to strengthen
our position in the Dutch market.
Operating Cash Flow - Liberty Global Group
Reported OCF for our operations attributed to the Liberty Global
Group increased 2% to $2.1 billion for the three months ended 2015
and remained flat at $4.0 billion for the six months ended 2015,
each as compared to the corresponding prior-year period. These
comparisons were impacted by FX, acquisitions, dispositions and the
aforementioned contributors to our reported top-line results. On a
rebased basis, we delivered 4% and 2% OCF growth for the three and
six months ended June 30, 2015, respectively.
Our rebased OCF performance for the Liberty Global Group in Q2
2015 included the favorable net impact of certain items, the most
significant of which included the $12 million non-recurring and $7
million recurring impact of reduced network infrastructure charges
in U.K./Ireland and a favorable $10 million non-recurring
settlement of an operational contingency at Telenet, partially
offset by $9 million of additional expenses in the Netherlands
associated with the integration of Ziggo. For the YTD period, the
Ziggo integration costs and other non-recurring and non-operational
items had a net negative impact on our OCF growth rate as the Q1
detriment from the impact of these non-operational and
non-recurring items was only partially offset by the Q2
benefit.
In terms of regional results for Q2, our operations in Western
Europe delivered 5% rebased OCF growth, while CEE experienced a 1%
OCF contraction during the same period. The CEE result was
negatively affected by a recurring $4 million quarterly increase in
VAT payments related to our Luxembourg-based direct-to-home ("DTH")
operation that took effect on January 1, 2015.
In our five largest segments, our Q2 OCF performance was led by
Telenet in Belgium, which delivered 12% rebased growth in Q2
including the non-recurring settlement mentioned above. Our
operations in U.K./Ireland posted 8% rebased OCF growth in Q2,
fueled by 8.5% rebased growth in the U.K., supported by the
aforementioned revenue drivers, continued cost controls and full
run-rate synergies, along with the previously mentioned reduction
in network infrastructure charges. In Germany, our rebased OCF
growth of 5% in Q2 was driven by revenue growth, partially offset
by increases in staff-related costs and programming and copyright
costs. In Switzerland/Austria, rebased OCF growth of 2% was
impacted by increases in programming and copyright costs and
marketing and sales costs. Rounding out Western Europe, in the
Netherlands, our Q2 OCF declined 5% on a rebased basis primarily
due to the previously mentioned revenue contraction and integration
costs. We have made significant progress on the Ziggo synergy plan
and we expect the program to favorably impact the Dutch OCF in the
second half of 2015.
As compared to the corresponding periods in 2014, our OCF
margin17 increased 120 basis points to 48.4% in Q2 and 30 basis
points to 47.7% for the first half of 2015.
Property and Equipment Additions - Liberty Global
Group
For the three months ended June 30, 2015, the Liberty Global
Group reported property and equipment ("P&E") additions18 of
$971 million or 22.8% of revenue as compared to $895 million or
20.8% of revenue in Q2 2014. For the YTD period, the Liberty Global
Group incurred P&E additions of $1.8 billion or 21.7% of
revenue as compared to $1.7 billion or 20.5% of revenue for the
corresponding prior-year period. The year-over-year increase in
P&E additions in absolute terms for both the Q2 and H1 periods
is primarily related to increases associated with the acquisition
of Ziggo and higher spending for support capital. These increases
were partially offset by the impact of the weakening of all of our
European currencies against the U.S. dollar. In terms of a
breakdown for our H1 2015 spend, 48% was related to CPE and
scalable infrastructure, 24% was related to line extensions and
upgrade/rebuild activity, and 28% was related to support capital,
including IT upgrades and general support systems. Going forward,
we expect our network costs to increase as we begin to increase the
pace of construction associated with Project Lightning, our network
extension program in the U.K.
Free Cash Flow - Liberty Global Group
For the three and six months ended June 30, 2015, our operations
attributed to the Liberty Global Group generated FCF of $539
million and $894 million, respectively, which compares to the $707
million and $990 million that we generated in the prior-year
periods, respectively. The declines in our Q2 and H1 FCF, as
compared to the corresponding 2014 periods, are attributable to the
net effects of decreases associated with adverse movements in FX
and working capital and increases associated with the inclusion of
Ziggo, as well as organic OCF growth. In addition to these factors,
our H1 performance also includes the impact of higher tax payments,
primarily in Belgium.
Leverage, Liquidity & Shares Outstanding - Liberty Global
Group
At June 30, 2015, we attributed to the Liberty Global Group
total third-party debt19 of $43.7 billion and cash and cash
equivalents of $587 million. As compared to Q1 2015, such debt
increased by $1.7 billion primarily due to the strengthening of our
borrowing currencies against the U.S. dollar. At the end of the
second quarter, a Liberty Global Group entity contributed $100
million of cash to a LiLAC Group entity in order to provide
liquidity to fund ongoing operating costs and potential
acquisitions.
Excluding $1.5 billion of debt backed by shares we hold in
Sumitomo Corporation and ITV plc, the Liberty Global Group ended Q2
2015 with consolidated adjusted gross and net leverage ratios of
5.1x and 5.0x, respectively. During the quarter, we improved our
maturity profile through the refinancing of approximately $3.7
billion principal amount of debt, primarily at Virgin Media and the
UPC credit pool. As a result, at the end of Q2, the average tenor
of third-party debt attributed to the Liberty Global Group was
nearly eight years, less than 10% of which is due before 2020, and
the blended fully-swapped borrowing cost20 of such debt was
5.2%.
With respect to liquidity, we finished Q2 with approximately
$4.2 billion, including $587 million of cash as noted above and
aggregate borrowing capacity of $3.6 billion, as represented by the
maximum undrawn commitments under each of the credit facilities21
attributed to the Liberty Global Group.
At July 29, 2015, we had 875 million Liberty Global Group shares
outstanding, including 253 million Class A ordinary shares, 10
million Class B ordinary shares and 612 million Class C ordinary
shares.
Subscriber Statistics - LiLAC Group
At June 30, 2015, we provided a total of 3.5 million
subscription services to the 1.6 million unique customers across
our cable footprint of 4.1 million homes passed within Chile and
Puerto Rico. These services consisted of 1.3 million video, 1.3
million broadband internet and 0.9 million telephony subscriptions.
During Q2, we increased our RGUs by 199,000, driven by our
acquisition of Choice in Puerto Rico and 43,000 organic RGU
additions, of which 37,000 were gained at VTR and 6,000 at Liberty
Puerto Rico. At June 30, 2015, 66% of our customers were bundled
and our bundling ratio was 2.1.
Our Q2 organic additions of 43,000 RGUs represent an increase of
approximately 20% over our Q1 2015 additions of 36,000 RGUs, and a
14% decline over our Q2 2014 additions of 50,000 RGUs. From a
product perspective, our Q2 additions consisted of 13,000 video,
26,000 broadband and 4,000 telephony RGUs. As compared to the
prior-year quarter, we delivered slightly higher net adds in both
video and broadband, as we continue to capitalize on our speed
leadership and high-value bundles in both markets. In video, VTR
gained 15,000 subscribers in the quarter, its best quarterly result
in two years. This compares favorably to a loss of 5,000 in Q1 2015
and a gain of 9,000 in Q2 2014. A key driver behind this improved
performance was the February launch of the “Vive Más” bundles and
an expanded HD line-up. In Chile, we had a slight decline in
telephony RGUs during Q2, which compares to a gain of 11,000 in Q2
2014, with the strong prior year performance supported by
promotions that are no longer in effect.
In addition to our triple-play business, VTR added 12,000 mobile
subscribers during Q2, increasing our total number of subscribers
at quarter end to 129,000. At June 30, 2015, 90% of our mobile base
subscribed to a postpaid product in Chile.
Revenue - LiLAC Group
For the operations attributed to the LiLAC Group, our reported
revenue increased 2% to $311 million and declined 1% to $599
million for the three and six months ended June 30, 2015,
respectively, as compared to the corresponding prior-year periods.
The comparison for the three-month period was positively impacted
by organic revenue growth and our acquisition of Choice in Puerto
Rico, partially offset by the negative impact of FX movements
related to an 11% weakening of the Chilean peso against the U.S.
dollar. Similarly, our six-month result was positively impacted by
organic revenue growth and the Choice acquisition, but was more
than offset by a 12% decline in the Chilean peso against the U.S.
dollar. When adjusting for acquisitions and FX, the operations
attributed to the LiLAC Group achieved year-over-year rebased
revenue growth of 7% in Q2 and 6% for the year-to-date period.
VTR posted rebased revenue growth of 7% and 6% for the three and
six months ended June 30, 2015, respectively. These increases were
primarily attributable to increases in (i) cable subscription
revenue, driven by growth in subscribers and an increase in ARPU,
and (ii) mobile subscription revenue, due to growth in overall
subscribers and higher mobile ARPU resulting from an increase in
the proportion of postpaid subscribers. The revenue increase during
the six-month period included a Q1 adjustment to reflect the
retroactive application of lower proposed tariffs on ancillary
services and fixed-line termination rates, which reduced our Q1
revenue by $3.5 million.
Turning to our Puerto Rican operation, we delivered rebased
revenue growth of 8% in Q2 and 7% for the year-to-date period. In
particular, our second quarter results reflect the positive
contribution of 45,000 net subscriber additions over the last
twelve months.
Operating Cash Flow - LiLAC Group
Reported OCF for the LiLAC Group increased 8% to $128 million in
Q2 2015 and 3% to $236 million for the six months ended 2015, as
compared to the corresponding prior-year periods. These increases,
which would have been higher if not for the FX headwinds related to
the Chilean peso (as noted above), are driven by organic growth and
the inclusion of Choice's results for one month. On a rebased
basis, we delivered 13% and 10% OCF growth for the LiLAC Group for
the three and six months ended June 30, 2015, respectively.
VTR, which represents approximately 70% of the LiLAC Group's
segment OCF, posted rebased OCF growth of 14% in Q2 and 9% YTD,
while Liberty Puerto Rico generated rebased OCF growth of 12% in Q2
and 13% YTD. OCF growth for each business was largely due to the
aforementioned revenue growth drivers and improved operational
leverage. VTR's rebased OCF growth for both the Q2 and H1 periods
was adversely affected by the negative FX impacts of approximately
$2 million and $4 million, respectively, related to programming and
other expenses denominated in U.S. dollars.
From an OCF margin perspective, the LiLAC Group's margin
increased 240 basis points to 41.0% in Q2 and 150 basis points to
39.4% in H1 2015, supported by year-over-year improvements in
operational leverage in both countries.
Property and Equipment Additions - LiLAC Group
For the three months ended June 30, 2015, the operations
attributed to the LiLAC Group reported P&E additions of $70
million or 22.4% of revenue as compared to $76 million or 24.6% of
revenue in Q2 2014. For the YTD period, such operations incurred
P&E additions of $126 million or 21.0% of revenue during 2015
as compared to $135 million or 22.2% of revenue for the
corresponding prior-year period. The declines in our P&E
additions in absolute terms were due in part to the negative impact
of the Chilean peso FX movements noted above. In terms of a
breakdown of our YTD 2015 spend, 62% was related to CPE and
scalable infrastructure, 26% was related to line extensions and
upgrade/rebuild activity and 12% was related to support capital,
including IT upgrades and general support systems.
Free Cash Flow - LiLAC Group
For the three and six months ended June 30, 2015, the operations
attributed to the LiLAC Group generated FCF of $54 million and $28
million, respectively, as compared to $9 million and $63 million,
respectively, in the corresponding prior-year periods. The
improvement in Q2 2015 can be attributed to positive movements in
trade working capital and OCF growth. In the YTD period, the
negative variance was primarily due to higher interest payments,
partially offset by positive movements in trade working capital.
The lower FCF on a YTD basis as compared to the prior-year period
was directly attributable to interest and related derivative
payments of approximately $67 million in January 2015 on the $1.4
billion in bonds at VTR Finance B.V., as similar payments were not
required to be made in the corresponding prior year period.
Leverage, Liquidity & Shares Outstanding - LiLAC
Group
At June 30, 2015, we had total debt attributed to the LiLAC
Group of $2.3 billion and cash and cash equivalents of $233
million. As compared to March 31, 2015, the carrying value of our
debt attributed to the LiLAC Group increased by $261 million,
reflecting the impact of incremental borrowings in Puerto Rico to
fund the Choice acquisition. The cash balance attributed to the
LiLAC Group increased by $153 million in the quarter, reflecting
the contribution of $100 million of cash by an entity attributed to
the Liberty Global Group, as well as recent cash flow generation at
each of VTR and Liberty Puerto Rico.
Giving pro forma effect to the OCF impact of the Choice
transaction, the LiLAC Group ended Q2 2015 with adjusted gross and
net leverage ratios of 3.9x and 3.5x, respectively. These ratios
take into account the impact of a cross-currency derivative that
synthetically swaps VTR Finance B.V.'s $1.4 billion debt into CLP
760.3 billion. At June 30, 2015, our net leverage ratio in Chile
was 3.5x and our pro forma net leverage ratio in Puerto Rico was
4.8x. At June 30, 2015, the average tenor of our third-party debt
attributed to the LiLAC Group was nearly eight years, none of which
is due prior to 2022, and the blended fully-swapped borrowing cost
of such debt was 8.7%.
At July 29, 2015, we had 44 million LiLAC shares outstanding,
including 13 million Class A ordinary shares, 0.5 million Class B
ordinary shares and 31 million Class C ordinary shares.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including statements regarding our operations, strategies,
future growth prospects and opportunities (in particular with
respect to upselling and bundling of products) and measures to
improve the performance of certain of our operating companies; our
expected revenue, OCF and FCF growth; subscriber and RGU growth,
including our expectations for organic subscriber additions in
2015; our expectations with respect to the impact of the Liberty
3.0 program on our results of operations and growth prospects; the
development and expansion of our superior network and innovative
products and services, including commencement of EuroDocsis 3.1
testing; future M&A opportunities; our mobile and wireless
strategy, including anticipated 4G launches; our share repurchase
program; the strength of our balance sheet and tenor of our
third-party debt; our expectations with respect to Project
Lightning; and other information and statements that are not
historical fact. These forward-looking statements involve certain
risks and uncertainties that could cause actual results to differ
materially from those expressed or implied by these statements.
These risks and uncertainties include the continued use by
subscribers and potential subscribers of our services and their
willingness to upgrade to our more advanced offerings; our ability
to meet challenges from competition, to manage rapid technological
change or to maintain or increase rates to our subscribers or to
pass through increased costs to our subscribers; the effects of
changes in laws or regulation; general economic factors; our
ability to obtain regulatory approval and satisfy regulatory
conditions associated with acquisitions and dispositions; our
ability to successfully acquire and integrate new businesses and
realize anticipated efficiencies from businesses we acquire; the
availability of attractive programming for our digital video
services and the costs associated with such programming; our
ability to achieve forecasted financial and operating targets; the
outcome of any pending or threatened litigation; our ability to
access cash of our subsidiaries and the impact of our 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 and
vendors (including our third-party wireless network providers under
our MVNO arrangements) to timely deliver quality products,
equipment, software, services and access; our ability to adequately
forecast and plan future network requirements including the costs
and benefits associated with network expansions like Project
Lightning; and other factors detailed from time to time in our
filings with the Securities and Exchange Commission, including the
most recently filed Forms 10-K and 10-Q. These forward-looking
statements speak only as of the date of this release. We expressly
disclaim any obligation or undertaking to disseminate any updates
or revisions to any forward-looking statement contained herein to
reflect any change in our expectations with regard thereto or any
change in events, conditions or circumstances on which any such
statement is based.
About Liberty Global
Liberty Global is the largest international cable company with
operations in 14 countries. We connect people to the digital world
and enable them to discover and experience its endless
possibilities. Our market-leading products are provided through
next-generation networks and innovative technology platforms that
connected 27 million customers subscribing to 56 million
television, broadband internet and telephony services at June 30,
2015. In addition, we served five million mobile subscribers and
offered WiFi service across six million access points.
Liberty Global’s businesses are currently attributed to two
tracking stock groups: the Liberty Global Group (NASDAQ: LBTYA,
LBTYB and LBTYK), which primarily comprises our European
operations, and the LiLAC Group (NASDAQ: LILA and LILAK, OTC Link:
LILAB), which comprises our operations in Latin America and the
Caribbean.
Liberty Global's consumer brands are Virgin Media, Ziggo,
Unitymedia, Telenet, UPC, VTR and Liberty. Our operations also
include Liberty Global Business Services and Liberty Global
Ventures. For more information, please visit
www.libertyglobal.com.
_______________________________________
1
We sold substantially all of our legacy
content business on January 31, 2014 (the "Chellomedia Sale").
Accordingly, we have presented the disposed business as a
discontinued operation for the six months ended June 30, 2014.
2
On July 1, 2015, Liberty Global completed
the "LiLAC Transaction" pursuant to which each holder of Liberty
Global’s then-outstanding ordinary shares remained a holder of the
same amount and class of Liberty Global ordinary shares and
received one share of the corresponding class of LiLAC ordinary
shares for each 20 then-outstanding Liberty Global ordinary shares
held as of the record date for such distribution, with cash issued
in lieu of fractional LiLAC ordinary shares. The Liberty Global
ordinary shares following the LiLAC Transaction and the LiLAC
Ordinary Shares are tracking shares. Tracking shares are intended
by the issuing company to reflect or “track” the economic
performance of a particular business or “group,” rather than the
economic performance of the company as a whole. The Liberty Global
Ordinary Shares and the LiLAC Ordinary Shares are intended to
reflect or “track” the economic performance of the Liberty Global
Group and the LiLAC Group, respectively (each as defined and
described below). For more information regarding the tracking
shares, see note 1 to our condensed consolidated financial
statements included in our quarterly report on Form 10-Q filed
August 4, 2015 (the "10-Q").
3
Please see page 25 for the definition of
RGUs. Organic figures exclude RGUs of acquired entities at the date
of acquisition, but include the impact of changes in RGUs from the
date of acquisition. All subscriber/RGU additions or losses refer
to net organic changes, unless otherwise noted.
4
Please see page 13 for information on
rebased growth.
5
Please see page 16 for our Operating Cash
Flow ("OCF") definition and the required reconciliation.
6
Please see page 19 for information on Free
Cash Flow (“FCF”) and the required reconciliations.
7
“Liberty Global Group” does not represent
a separate legal entity, rather it represents those businesses,
assets and liabilities that have been attributed to that group. The
Liberty Global Group comprises our businesses, assets and
liabilities not attributed to the LiLAC Group, including Virgin
Media, Unitymedia, UPC Holding BV ("UPC Holding"), Telenet and
Ziggo Group Holding.
8
Our gross and net debt ratios are defined
as total debt and net debt to annualized OCF of the latest quarter.
Net debt is defined as total debt less cash and cash equivalents.
For purposes of these calculations, debt is measured using swapped
foreign currency rates, consistent with the covenant calculation
requirements of our subsidiary debt agreements, and, in the case of
the Liberty Global Group, excludes the loans backed by the shares
we hold in Sumitomo Corp. and ITV plc.
9
Liquidity refers to cash and cash
equivalents plus the maximum undrawn commitments under subsidiary
borrowing facilities, without regard to covenant compliance
calculations.
10
“LiLAC Group” does not represent a
separate legal entity, rather it represents those businesses,
assets and liabilities that have been attributed to that group. The
LiLAC Group comprises our operations in Latin America and the
Caribbean and has attributed to it VTR and Liberty Puerto Rico.
11
Total B2B includes subscription (SOHO) and
non-subscription revenue. Non-subscription revenue includes the
amortization of deferred upfront installation fees and deferred
non-recurring fees received on B2B contracts where we maintain
ownership of the installed equipment. Most of this deferred revenue
relates to Virgin Media's B2B contracts, and in connection with the
application of the Virgin Media acquisition accounting, we
eliminated all of Virgin Media's B2B deferred revenue as of the
June 7, 2013 acquisition date. Due primarily to this acquisition
accounting, the amortization of Virgin Media's deferred revenue is
accounting for $6 million and $13 million of the rebased increases
in Liberty Global Group's total B2B revenue for the three and six
months ended June 30, 2015, respectively.
12
Enhanced video penetration is calculated
by dividing the number of enhanced video RGUs by the total number
of basic and enhanced video RGUs.
13
Our mobile subscriber count represents the
number of active subscriber identification module (“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 (via a dongle) 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.
14
In November 2014, Virgin Media introduced
a new mobile program in the U.K. whereby customers can elect to
purchase a mobile handset pursuant to a contract that is
independent of a mobile airtime services contract (the "Freestyle"
mobile proposition). Under Freestyle contractual agreements, we
generally recognize the full sales price for the mobile handset
upon delivery as a component of other revenue, regardless of
whether the sales price is received upfront or in installments.
Revenue associated with the airtime services is recognized as
mobile subscription revenue over the contractual term of the
airtime services contract. Prior to the launch of Freestyle
contracts in November 2014, handsets were generally provided to
customers on a subsidized basis. As a result, revenue associated
with the handset was only recognized upfront to the extent of cash
collected at the time of sale, and the monthly amounts collected
for both the handset and airtime were included in mobile
subscription revenue over the term of the contract. Handset costs
associated with Freestyle handset revenue are expensed at the point
of sale.
15
Liberty Global Group's 15% rebased mobile
revenue growth for each of the Q2 and H1 2015 periods includes the
positive impact of our Freestyle mobile promotion in the U.K., as
further described in footnote 14. Excluding the impact of mobile
handset revenue (which includes a $31 million and $52 million
benefit from our Freestyle mobile promotion in Q2 and H1 2015,
respectively), our rebased mobile revenue growth would have been 3%
and 5%, respectively.
16
Average Revenue Per Unit (“ARPU”) refers
to the average monthly subscription revenue per average customer
relationship and is calculated by dividing the average monthly
subscription revenue (excluding mobile services, B2B services,
interconnect, channel carriage fees, mobile handset sales and
installation fees) for the indicated period, by the average of the
opening and closing balances for customer relationships for the
period. Customer relationships of entities acquired during the
period are normalized. Unless otherwise indicated, ARPU per
customer relationship for the Liberty Global Group and LiLAC Group
are not adjusted for currency impacts.
17
OCF margin is calculated by dividing OCF
by total revenue for the applicable period.
18
Our property and equipment additions
include our capital expenditures on an accrual basis and amounts
financed under vendor financing or capital lease arrangements.
19
Total debt includes capital lease
obligations.
20
Our fully-swapped debt borrowing cost
represents the weighted average interest rate on our aggregate
variable- and fixed-rate indebtedness (excluding capital lease
obligations), including the effects of derivative instruments,
original issue premiums or discounts and commitment fees, but
excluding the impact of financing costs.
21
Our aggregate unused borrowing capacity of
$3.9 billion represents the maximum undrawn commitments under our
subsidiaries' applicable facilities without regard to covenant
compliance calculations. This consists of $3.6 billion attributed
to the Liberty Global Group and $234 million attributed to LiLAC
Group. Upon completion of the relevant June 30, 2015 compliance
reporting requirements for our credit facilities, and assuming no
further changes from quarter-end borrowing levels, we anticipate
that our subsidiaries' borrowing capacity would be $3.3 billion.
This consists of $3.1 billion attributed to the Liberty Global
Group and $234 million attributed to the LiLAC Group.
Balance Sheets, Statements of Operations and Statement of
Cash Flows
The condensed consolidated balance sheets, statements of
operations and statements of cash flows of Liberty Global plc are
included in our 10-Q. For attributed financial information of the
Liberty Global Group and the LiLAC Group, see Exhibit 99.1 to our
10-Q.
Revenue and Operating Cash Flow
In the following tables, we present revenue and operating cash
flow by reportable segment of our continuing operations for the
three and six months ended June 30, 2015, as compared to the
corresponding prior-year period. All of our reportable segments
derive their revenue primarily from broadband communications
services, including video, broadband internet and fixed-line
telephony services. Most of our reportable segments also provide
B2B and mobile services. For detailed information regarding the
composition of our reportable segments, including information
regarding certain changes to our reportable segments that we made
during the fourth quarter of 2014 and the second quarter of 2015,
see note 14 to our condensed consolidated financial statements
included in our 10-Q.
For purposes of calculating rebased growth rates on a comparable
basis for all businesses that we owned during 2015, we have
adjusted our historical revenue and OCF for the three and six
months ended June 30, 2014 to (i) include the pre-acquisition
revenue and OCF of certain entities acquired during 2014 and 2015
in our rebased amounts for the three and six months ended June 30,
2014 to the same extent that the revenue and OCF of such entities
are included in our results for the three and six months ended June
30, 2015, (ii) remove intercompany eliminations for the applicable
periods in 2014 to conform to the presentation during the 2015
periods following the disposal of the Chellomedia operations, which
resulted in previously eliminated intercompany costs becoming
third-party costs, (iii) exclude the pre-disposition revenue and
OCF of "offnet" subscribers in the U.K. that were disposed in the
fourth quarter of 2014 and the first half of 2015 from our rebased
amounts for the three and six months ended June 30, 2014 to the
same extent that the revenue and OCF of these disposed subscribers
is excluded from our results for the three and six months ended
June 30, 2015, (iv) exclude the revenue and OCF related to a
partner network agreement that was terminated shortly after the
Ziggo acquisition from our rebased amounts for the three and six
months ended June 30, 2014 to the same extent that the revenue and
OCF from this partner network is excluded from our results for the
three and six months ended June 30, 2015 and (v) reflect the
translation of our rebased amounts for the three and six months
ended June 30, 2014 at the applicable average foreign currency
exchange rates that were used to translate our results for the
three and six months ended June 30, 2015. We have included Ziggo,
Choice and two small entities in whole or in part in the
determination of our rebased revenue and OCF for the three months
ended June 30, 2014. We have included Ziggo, Choice and three small
entities in whole or in part in the determination of our rebased
revenue and OCF for the six months ended June 30, 2014. We have
reflected the revenue and OCF of the acquired entities in our 2014
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
Generally Accepted Accounting Principles in the United States
(“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
non-recurring 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
and OCF 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. The
adjustments reflected in our rebased amounts have not been prepared
with a view towards complying with Article 11 of Regulation S-X. In
addition, the rebased growth percentages are not necessarily
indicative of the revenue and OCF that would have occurred if these
transactions had occurred on the dates assumed for purposes of
calculating our rebased amounts or the revenue and OCF that will
occur in the future. The rebased growth percentages have been
presented as a basis for assessing growth rates on a comparable
basis, and are not presented as a measure of our pro forma
financial performance. Therefore, we believe our rebased data is
not a non-GAAP financial measure as contemplated by Regulation G or
Item 10 of Regulation S-K.
In each case, the following tables present (i) the amounts
reported by each of our reportable segments for the comparative
periods, (ii) the U.S. dollar change and percentage change from
period to period and (iii) the percentage change from period to
period on a rebased basis:
Three months ended Increase
Increase June 30, (decrease) (decrease)
Revenue 2015 2014 $
% Rebased % in millions, except % amounts
Liberty Global Group: European Operations Division:
U.K./Ireland $ 1,759.6 $ 1,896.7 $ (137.1 ) (7.2 ) 3.4 The
Netherlands 683.9 316.3 367.6 116.2 (2.2 ) Germany 591.0 688.8
(97.8 ) (14.2 ) 6.3 Belgium 500.3 582.4 (82.1 ) (14.1 ) 6.4
Switzerland/Austria 448.8 476.7 (27.9 ) (5.9 ) 2.8
Total Western Europe 3,983.6 3,960.9 22.7 0.6 3.1 Central
and Eastern Europe 267.2 324.5 (57.3 ) (17.7 ) 1.4 Central and
other (1.0 ) (1.2 ) 0.2
N.M.
* Total European Operations Division 4,249.8 4,284.2
(34.4 ) (0.8 ) 3.0 Corporate and other 12.8 17.6 (4.8 ) (27.3 ) *
Intersegment eliminations (7.5 ) (6.0 ) (1.5 ) N.M. *
Total Liberty Global Group 4,255.1 4,295.8 (40.7 )
(0.9 ) 3.0 LiLAC Group: Chile 220.8 229.8 (9.0 ) (3.9 ) 7.1
Puerto Rico 90.6 76.6 14.0 18.3 7.9
Total LiLAC Group 311.4 306.4 5.0 1.6
7.3 Total $ 4,566.5 $ 4,602.2 $ (35.7 )
(0.8 ) 3.3
* - Omitted; N.M. - Not Meaningful
Six months ended Increase
Increase June 30, (decrease) (decrease)
Revenue 2015 2014 $
% Rebased % in millions, except % amounts
Liberty Global Group: European Operations Division:
U.K./Ireland $ 3,471.0 $ 3,744.2 $ (273.2 ) (7.3 ) 2.9 The
Netherlands 1,391.3 634.4 756.9 119.3 (0.8 ) Germany 1,188.9
1,384.7 (195.8 ) (14.1 ) 5.4 Belgium 1,003.0 1,156.6 (153.6 ) (13.3
) 6.5 Switzerland/Austria 888.1 940.5 (52.4 ) (5.6 )
3.3 Total Western Europe 7,942.3 7,860.4 81.9 1.0 3.1
Central and Eastern Europe 535.4 648.4 (113.0 ) (17.4 ) 1.1 Central
and other (3.8 ) (2.0 ) (1.8 ) N.M. * Total European
Operations Division 8,473.9 8,506.8 (32.9 ) (0.4 ) 3.0 Corporate
and other 25.6 36.0 (10.4 ) (28.9 ) * Intersegment eliminations
(15.3 ) (13.2 ) (2.1 ) N.M. * Total Liberty Global
Group 8,484.2 8,529.6 (45.4 ) (0.5 ) 2.9 LiLAC
Group: Chile 429.6 455.1 (25.5 ) (5.6 ) 6.0 Puerto Rico 169.6
151.3 18.3 12.1 6.9 Total LiLAC
Group 599.2 606.4 (7.2 ) (1.2 ) 6.2
Inter-group eliminations — (0.1 ) 0.1 N.M. *
Total $ 9,083.4 $ 9,135.9 $ (52.5 ) (0.6 ) 3.2
* - Omitted; N.M. - Not Meaningful
Three months ended Increase
Increase June 30, (decrease)
(decrease) OCF 2015 2014
$ % Rebased % in millions, except %
amounts Liberty Global Group: European Operations
Division: U.K./Ireland $ 805.6 $ 829.5 $ (23.9 ) (2.9 ) 7.7 The
Netherlands 371.0 185.1 185.9 100.4 (4.9 ) Germany 366.9 431.0
(64.1 ) (14.9 ) 5.4 Belgium 260.8 287.9 (27.1 ) (9.4 ) 12.2
Switzerland/Austria 259.7 277.4 (17.7 ) (6.4 ) 1.8
Total Western Europe 2,064.0 2,010.9 53.1 2.6 4.6 Central
and Eastern Europe 118.4 147.2 (28.8 ) (19.6 ) (0.8 ) Central and
other (72.7 ) (71.9 ) (0.8 ) N.M. * Total European
Operations Division 2,109.7 2,086.2 23.5 1.1 3.7 Corporate and
other (52.3 ) (59.6 ) 7.3 12.2 * Total Liberty
Global Group 2,057.4 2,026.6 30.8 1.5
3.9 LiLAC Group: LiLAC Division: Chile 87.6 85.8 1.8 2.1
13.9 Puerto Rico 40.8 33.4 7.4 22.2
11.5 Total LiLAC Division 128.4 119.2 9.2 7.7 13.1 Corporate
and other (0.8 ) (0.9 ) 0.1 N.M. * Total LiLAC
Group 127.6 118.3 9.3 7.9 13.3
Total $ 2,185.0 $ 2,144.9 $ 40.1 1.9
4.4
* - Omitted; N.M. - Not Meaningful
Six months ended Increase
Increase June 30, (decrease) (decrease)
OCF 2015 2014 $ %
Rebased % in millions, except % amounts
Liberty Global Group: European Operations Division: U.K./Ireland $
1,568.9 $ 1,621.1 $ (52.2 ) (3.2 ) 7.1 The Netherlands 738.9 368.4
370.5 100.6 (4.3 ) Germany 730.9 860.0 (129.1 ) (15.0 ) 4.4 Belgium
507.8 590.0 (82.2 ) (13.9 ) 5.8 Switzerland/Austria 508.5
541.8 (33.3 ) (6.1 ) 2.2 Total Western Europe 4,055.0
3,981.3 73.7 1.9 3.6 Central and Eastern Europe 236.5 305.4 (68.9 )
(22.6 ) (5.1 ) Central and other (140.6 ) (142.8 ) 2.2 N.M.
* Total European Operations Division 4,150.9 4,143.9
7.0 0.2 2.6 Corporate and other (104.4 ) (105.1 ) 0.7 0.7 *
Intersegment eliminations — 4.0 (4.0 ) N.M. *
Total Liberty Global Group 4,046.5 4,042.8 3.7
0.1 2.4 LiLAC Group: LiLAC Division: Chile
163.6 168.5 (4.9 ) (2.9 ) 8.9 Puerto Rico 74.3 62.7
11.6 18.5 12.7 Total LiLAC Division 237.9
231.2 6.7 2.9 10.1 Corporate and other (2.1 ) (1.6 ) (0.5 ) N.M.
* Total LiLAC Group 235.8 229.6 6.2
2.7 9.9 Total $ 4,282.3 $ 4,272.4
$ 9.9 0.2 2.8
* - Omitted; N.M. - Not Meaningful
Operating Cash Flow Definition and Reconciliation
As used herein, OCF has the same meaning as the term "Adjusted
OIBDA" that is referenced in our 10-Q. OCF is the primary measure
used by our chief operating decision maker to evaluate segment
operating performance. OCF 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, OCF is defined as operating income before
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 OCF is a meaningful measure and is superior
to available GAAP measures 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 OCF 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. OCF should be
viewed as a measure of operating performance that is a supplement
to, and not a substitute for, operating income, net earnings or
loss, cash flow from operating activities and other GAAP measures
of income or cash flows. A reconciliation of total segment
operating cash flow to our operating income is presented below.
Three months ended Six months ended
June 30, June 30, 2015 2014
2015 2014 in millions Total segment
operating cash flow $ 2,185.0 $ 2,144.9 $ 4,282.3 $ 4,272.4
Share-based compensation expense (56.6 ) (54.4 ) (128.0 ) (109.5 )
Depreciation and amortization (1,477.8 ) (1,393.4 ) (2,929.2 )
(2,770.5 ) Impairment, restructuring and other operating items, net
(25.7 ) (27.6 ) (42.7 ) (141.2 ) Operating income $ 624.9 $
669.5 $ 1,182.4 $ 1,251.2
Summary of Debt, Capital Lease Obligations and Cash and Cash
Equivalents
The following table1 details the U.S. dollar equivalent balances
of our third-party consolidated debt, capital lease obligations and
cash and cash equivalents at June 30, 2015:
Capital Debt &
Capital Cash Lease Lease and Cash
Debt2 Obligations Obligations
Equivalents in millions
Liberty Global and Liberty Global
Group unrestricted subsidiaries
$ 1,567.1 $ 66.4 $ 1,633.5 $ 253.3 Virgin Media3 14,536.5 215.6
14,752.1 29.9 UPC Holding 6,559.7 27.5 6,587.2 30.3 Unitymedia
7,581.8 734.4 8,316.2 3.5 Ziggo Group Holding 8,269.3 0.2 8,269.5
11.0 Telenet 3,777.3 383.8 4,161.1 258.6 Total
Liberty Global Group 42,291.7 1,427.9 43,719.6
586.6 LiLAC Group unrestricted subsidiaries — — — 100.0 VTR Finance
1,400.0 0.4 1,400.4 95.0 Liberty Puerto Rico 933.2 0.8
934.0 37.9 Total LiLAC Group 2,333.2 1.2
2,334.4 232.9 Total $ 44,624.9 $ 1,429.1
$ 46,054.0 $ 819.5
Property and Equipment Additions and Capital
Expenditures
The tables below highlight the categories of the property and
equipment additions attributed to the Liberty Global Group and the
LiLAC Group for the indicated periods and reconciles those
additions to the capital expenditures that are presented in the
attributed statements of cash flows included in Exhibit 99.1 to our
10-Q:
Liberty Global Group
Three months ended Six months ended
June 30, June 30, 2015 2014
2015 2014 in millions, except % amounts
Customer premises equipment $ 283.3 $ 308.9 $ 551.6 $ 623.3
Scalable infrastructure 181.1 166.5 328.0 328.9 Line extensions
106.5 85.6 200.5 180.8 Upgrade/rebuild 129.2 129.5 248.5 260.6
Support capital & other 270.7 204.8 511.0
352.9 Property and equipment additions 970.8 895.3 1,839.6
1,746.5 Assets acquired under capital-related vendor financing
arrangements (380.9 ) (231.3 ) (675.9 ) (401.8 ) Assets acquired
under capital leases (12.5 ) (40.8 ) (74.5 ) (89.8 ) Changes in
current liabilities related to capital expenditures (37.8 ) (23.7 )
61.8 39.5 Capital expenditures4 $ 539.6 $
599.5 $ 1,151.0 $ 1,294.4 Property and
equipment additions as % of revenue 22.8 % 20.8 % 21.7 % 20.5 %
LiLAC Group
Three months ended Six months
ended June 30, June 30, 2015
2014 2015 2014 in millions, except %
amounts Customer premises equipment $ 31.8 $ 36.9 $ 61.2 $ 62.2
Scalable infrastructure 11.0 8.9 16.8 16.3 Line extensions 17.9
12.3 31.5 30.3 Upgrade/rebuild 0.5 6.0 1.0 7.8 Support capital
& other 8.6 11.4 15.4 17.9 Property
and equipment additions 69.8 75.5 125.9 134.5 Changes in current
liabilities related to capital expenditures (8.2 ) (8.0 ) (14.5 )
(26.9 ) Capital expenditures4 $ 61.6 $ 67.5 $ 111.4
$ 107.6 Property and equipment additions as %
of revenue 22.4 % 24.6 % 21.0 % 22.2 %
______________________________
1
Except as otherwise indicated, the amounts
reported in the table include the named entity and its
subsidiaries.
2
Debt amounts for UPC Holding, Ziggo Group
Holding and Telenet include notes issued by special purpose
entities that are consolidated by each.
3
The Virgin Media borrowing group includes
certain subsidiaries of Virgin Media, but excludes Virgin Media.
The cash and cash equivalents amount includes cash and cash
equivalents held by the Virgin Media borrowing group, but excludes
$0.7 million of cash and cash equivalents held by Virgin Media.
This amount is included in the amount shown for Liberty Global and
Liberty Global Group unrestricted subsidiaries. In addition, the
$57 million carrying value of the 6.5% convertible notes of Virgin
Media is excluded from the debt of the Virgin Media borrowing group
and included in the debt of Liberty Global and Liberty Global Group
unrestricted subsidiaries.
4
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 capital 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.
Free Cash Flow Definition and Reconciliation
We define free cash flow as net cash provided by our operating
activities, plus (i) excess tax benefits related to the exercise of
share-based incentive awards, (ii) cash payments for third-party
costs directly associated with successful and unsuccessful
acquisitions and dispositions and (iii) expenses financed by an
intermediary, less (a) capital expenditures, as reported in our
condensed consolidated statements of cash flows, (b) principal
payments on amounts financed by vendors and intermediaries and (c)
principal payments on capital leases (exclusive of the portions of
the network lease in Belgium and the duct leases in Germany that we
assumed in connection with certain acquisitions), with each item
excluding any cash provided or used by our discontinued operations.
We believe that our presentation of free cash flow provides useful
information to our investors because this measure can be used to
gauge our ability to service debt and fund new investment
opportunities. Free cash flow should not be understood to represent
our ability to fund discretionary amounts, as we have various
mandatory and contractual obligations, including debt repayments,
which are not deducted to arrive at this amount. Investors should
view free cash flow as a supplement to, and not a substitute for,
GAAP measures of liquidity included in our condensed consolidated
statements of cash flows. The following table provides the
reconciliation of our continuing operations' net cash provided by
operating activities to FCF for the indicated periods:
Three months ended Six months ended
June 30, June 30, 2015 2014
2015 2014 in millions
Consolidated Liberty Global
Net cash provided by operating activities of our continuing
operations $ 1,311.9 $ 1,596.3 $ 2,685.8 $ 2,916.7 Increases
(decreases) in excess tax benefits from share-based compensation5
(2.1 ) — 17.9 — Cash payments for direct acquisition and
disposition costs6 231.2 9.2 238.8 20.4 Expenses financed by an
intermediary7 42.6 7.4 51.7 14.3 Capital expenditures (601.2 )
(667.0 ) (1,262.4 ) (1,402.0 ) Principal payments on amounts
financed by vendors and intermediaries (350.4 ) (178.6 ) (732.1 )
(399.4 ) Principal payments on certain capital leases (39.7 ) (50.8
) (77.4 ) (97.2 ) FCF $ 592.3 $ 716.5 $ 922.3
$ 1,052.8
Liberty Global Group
Net cash provided by operating activities of our continuing
operations $ 1,198.2 $ 1,519.4 $ 2,552.1 $ 2,746.6 Increases
(decreases) in excess tax benefits from share-based compensation
(0.8 ) — 16.0 — Cash payments for direct acquisition and
disposition costs 228.2 9.1 234.8 20.0 Expenses financed by an
intermediary 42.6 7.4 51.7 14.3 Capital expenditures (539.6 )
(599.5 ) (1,151.0 ) (1,294.4 ) Principal payments on amounts
financed by vendors and intermediaries (350.4 ) (178.6 ) (732.1 )
(399.4 ) Principal payments on certain capital leases (39.6 ) (50.5
) (77.2 ) (96.8 ) FCF $ 538.6 $ 707.3 $ 894.3
$ 990.3
LiLAC Group
Net cash provided by operating activities of our continuing
operations $ 113.7 $ 76.9 $ 133.7 $ 170.1 Increases (decreases) in
excess tax benefits from share-based compensation (1.3 ) — 1.9 —
Cash payments for direct acquisition and disposition costs 3.0 0.1
4.0 0.4 Capital expenditures (61.6 ) (67.5 ) (111.4 ) (107.6 )
Principal payments on certain capital leases (0.1 ) (0.3 ) (0.2 )
(0.4 ) FCF $ 53.7 $ 9.2 $ 28.0 $ 62.5
______________________________
5
Excess tax benefits from share-based
compensation represent the excess of tax deductions over the
related financial reporting share-based compensation expense. The
hypothetical cash flows associated with these excess tax benefits
are reported as an increase to cash flows from financing activities
and a corresponding decrease to cash flows from operating
activities in our condensed consolidated statements of cash
flows.
6
Represents costs paid during the period to
third parties directly related to acquisitions and
dispositions.
7
For purposes of our condensed consolidated
statements of cash flows, expenses financed by an intermediary are
treated as hypothetical operating cash outflows and hypothetical
financing cash inflows when the expenses are incurred. When we pay
the financing intermediary, we record financing cash outflows in
our condensed consolidated statements of cash flows. For purposes
of our free cash flow definition, we add back the hypothetical
operating cash outflow when these financed expenses are incurred
and deduct the financing cash outflows when we pay the financing
intermediary. The inclusion of this adjustment represents a change
in our definition of free cash flow that we implemented effective
January 1, 2015. The free cash flow reported for the 2014 period
has been revised to calculate free cash flow on a basis that is
consistent with the new definition.
ARPU per Customer Relationship8
The following table provides ARPU per customer relationship for
the indicated periods:
Three months ended June 30, %
FX-Neutral9
2015 2014 Change % Change
Liberty Global Consolidated $ 44.91 $ 49.84
(9.9)
%
4.4 % Liberty Global Group € 39.78 € 35.76 11.2 % 4.6 % U.K. &
Ireland (Virgin Media) £ 49.49 £ 49.27 0.4 % 1.4 % Germany
(Unitymedia) € 22.80 € 21.36 6.7 % 6.7 % Belgium (Telenet) € 50.43
€ 48.01 5.0 % 5.0 % The Netherlands € 44.52 € 43.63 2.0 % 2.0 %
Other Europe € 27.68 € 25.10 10.3 % 2.2 % LiLAC Group $ 59.52 $
62.24
(4.4)
%
3.5 % Chile (VTR) CLP 32,682 CLP 31,699 3.1 % 3.1 % Liberty Puerto
Rico $ 85.10 $ 84.75 0.4 % 0.4 %
Mobile Statistics10
The following tables provide ARPU per mobile subscriber11 and
mobile subscribers12 for the indicated periods:
ARPU per Mobile Subscriber Three months ended June
30, % FX-Neutral 2015
2014 Change % Change Liberty Global Group:
Including interconnect revenue $ 22.54 $ 26.72
(15.6)
%
(4.2)
%
Excluding interconnect revenue $ 18.67 $ 21.67
(13.8)
%
(2.6)
%
LiLAC Group: Including interconnect revenue $ 27.70 $ 25.08
10.4 % 23.0 % Excluding interconnect revenue $ 24.96 $ 22.24 12.2 %
25.0 %
Mobile
Subscribers June 30, 2015 March 31,
2015 Change Liberty Global Group: U.K.
3,014,400 3,007,300 7,100 Belgium 953,700 924,500 29,200 Germany
336,300 322,700 13,600 The Netherlands 178,800 158,400 20,400
Switzerland 19,500 14,600 4,900 Austria 4,900 500
4,400 Total Western Europe 4,507,600 4,428,000
79,600 Hungary 20,400 15,100 5,300 Poland 8,600 9,400
(800 ) Total CEE 29,000 24,500 4,500
Liberty Global Group 4,536,600 4,452,500 84,100
LiLAC
Group - Chile 129,200 117,500 11,700 Grand
Total 4,665,800 4,570,000 95,800
_____________________________________________
8
Please see page 11 for the definition of
ARPU per customer.
9
Please see page 11 for information
regarding the FX-Neutral change in ARPU.
10
Please see page 11 for the definition of
mobile subscriber.
11
Our ARPU per mobile subscriber calculation
that excludes interconnect revenue refers to the average monthly
mobile subscription revenue per average mobile subscribers in
service and is calculated by dividing the average monthly mobile
subscription revenue (excluding activation fees, 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.
12
With the exception of the U.K. and Chile,
all of our mobile subscribers receive mobile services pursuant to
postpaid contracts. As of June 30, 2015 and March 31, 2015, the
mobile subscriber count in the U.K. included 850,500 and 879,100
prepaid mobile subscribers, respectively, and the mobile subscriber
count in Chile included 13,200 and 12,800 prepaid mobile
subscribers, respectively. In Germany, the Q2 organic increase in
our mobile subscribers of 22,100 was reduced by a non-organic
correction of 8,500 subscribers.
RGUs, Customers and Bundling
The following table provides information on the breakdown of our
RGUs and customer base and highlights our customer bundling metrics
at June 30, 2015, March 31, 2015 and June 30, 2014: 13
June 30,2015
March 31,2015
June 30,2014
Q2’15 / Q1’15(% Change)
Q2’15 / Q2’14(% Change)
Liberty Global
Group
Total RGUs Video RGUs 22,849,400 22,949,300 20,434,900 (0.4
%) 11.8 % Broadband Internet RGUs 16,372,000 16,255,600 13,701,900
0.7 % 19.5 % Telephony RGUs 13,650,300 13,551,500
11,568,900 0.7 % 18.0 % Total Liberty Global Group
52,871,700 52,756,400 45,705,700 0.2 % 15.7 %
Customers Single-Play Customers 10,084,900 10,265,000
9,798,700 (1.8 %) 2.9 % Dual-Play Customers 4,194,600 4,173,900
3,608,500 0.5 % 16.2 % Triple-Play Customers 11,465,900
11,381,200 9,563,300 0.7 % 19.9 % Total Liberty
Global Group 25,745,400 25,820,100 22,970,500 (0.3 %) 12.1 %
% of Single-Play Customers 39.2 % 39.7 % 42.7 % (1.3 %) (8.2 %) %
of Dual-Play Customers 16.3 % 16.2 % 15.7 % 0.6 % 3.8 % % of
Triple-play Customers 44.5 % 44.1 % 41.6 % 0.9 % 7.0 % RGUs
per customer relationship 2.05 2.04 1.99 0.5 % 3.0 %
LiLAC
Group
Total RGUs Video RGUs 1,290,700 1,228,800 1,223,300 5.0 %
5.5 % Broadband Internet RGUs 1,285,900 1,168,900 1,120,400 10.0 %
14.8 % Telephony RGUs 888,000 868,100 856,000
2.3 % 3.7 % Total LiLAC Group 3,464,600 3,265,800 3,199,700 6.1 %
8.3 %
Customers Single-Play Customers 559,400 485,100
492,500 15.3 % 13.6 % Dual-Play Customers 365,100 327,300 316,500
11.5 % 15.4 % Triple-Play Customers 725,000 708,700
691,400 2.3 % 4.9 % Total LiLAC Group 1,649,500 1,521,100
1,500,400 8.4 % 9.9 % % of Single-Play Customers 33.9 % 31.9
% 32.8 % 6.3 % 3.4 % % of Dual-Play Customers 22.1 % 21.5 % 21.1 %
2.8 % 4.7 % % of Triple-play Customers 44.0 % 46.6 % 46.1 % (5.6 %)
(4.6 %) RGUs per customer relationship 2.10 2.15 2.13 (2.3
%) (1.4 %)
_____________________________________________
13
The June 30, 2014 amounts do not include
the impact of the Ziggo acquisition. The March 31, 2015 and June
30, 2014 figures do not include the impact of the Choice
acquisition.
Consolidated Operating Data — June 30,
2015
Video
HomesPassed(1)
Two-wayHomesPassed(2)
CustomerRelationships(3)
TotalRGUs(4)
Basic
VideoSubscribers(5)
EnhancedVideoSubscribers(6)
DTHSubscribers(7)
MMDSSubscribers(8)
TotalVideo
InternetSubscribers(9)
TelephonySubscribers(10)
U.K. 12,705,500 12,684,100 5,018,600 12,538,500 — 3,736,800
— — 3,736,800 4,570,300 4,231,400 Germany 12,732,800 12,460,500
7,120,300 12,322,700 5,112,200 1,405,200 — — 6,517,400 2,986,600
2,818,700 The Netherlands(11) 7,006,900 6,992,300 4,185,300
9,798,100 835,500 3,347,800 — — 4,183,300 3,065,700 2,549,100
Belgium 2,926,000 2,926,000 2,181,400 4,794,700 369,900 1,693,900 —
— 2,063,800 1,543,400 1,187,500 Switzerland(11) 2,194,500 2,193,900
1,402,000 2,606,200 665,300 687,700 — — 1,353,000 755,700 497,500
Austria 1,361,300 1,361,300 650,300 1,357,900 143,600 363,900 — —
507,500 475,200 375,200 Ireland 853,100 759,900
505,200 1,099,000 34,800 318,900 —
25,600 379,300 367,300 352,400 Total
Western Europe 39,780,100 39,378,000 21,063,100
44,517,100 7,161,300 11,554,200 —
25,600 18,741,100 13,764,200 12,011,800
Poland 2,826,100 2,750,000 1,418,400 2,764,800 259,300 925,500 — —
1,184,800 1,010,700 569,300 Hungary 1,588,700 1,572,200 1,080,400
2,001,300 193,700 448,500 282,900 — 925,100 567,900 508,300 Romania
2,531,100 2,434,200 1,192,400 1,971,100 301,000 568,600 312,800 —
1,182,400 460,800 327,900 Czech Republic 1,399,000 1,329,000
714,600 1,186,900 92,200 363,700 117,700 — 573,600 448,400 164,900
Slovakia 507,800 485,100 276,500 430,500
31,300 143,600 67,000 500
242,400 120,000 68,100 Total CEE 8,852,700
8,570,500 4,682,300 8,354,600 877,500
2,449,900 780,400 500 4,108,300
2,607,800 1,638,500
Total Liberty
Global Group
48,632,800
47,948,500 25,745,400
52,871,700 8,038,800 14,004,100
780,400 26,100 22,849,400
16,372,000 13,650,300 Chile
2,999,300 2,481,200 1,250,600 2,701,500 102,200 920,700 — —
1,022,900 977,700 700,900 Puerto Rico 1,065,200 1,065,200
398,900 763,100 — 267,800 —
— 267,800 308,200 187,100
Total
LiLAC Group 4,064,500 3,546,400
1,649,500 3,464,600 102,200
1,188,500 — —
1,290,700 1,285,900 888,000
Grand Total 52,697,300 51,494,900 27,394,900
56,336,300 8,141,000 15,192,600 780,400
26,100 24,140,100 17,657,900 14,538,300
Subscriber Variance Table - June 30,
2015 vs. March 31, 2015
Video Homes
Passed(1)
Two-way Homes
Passed(2)
Customer
Relationships(3)
Total
RGUs(4)
Basic Video
Subscribers(5,12)
Enhanced Video
Subscribers(6,12)
DTH
Subscribers(7)
MMDS
Subscribers(8)
Total
Video
InternetSubscribers(9)
TelephonySubscribers(10)
U.K. 44,900 51,600 (7,700 ) 2,000 — (12,200 ) — — (12,200 )
6,600 7,600 Germany 10,400 44,700 8,700 91,700 (19,300 ) 11,800 — —
(7,500 ) 55,600 43,600 The Netherlands(11) 13,300 13,100 (56,600 )
(86,700 ) (36,300 ) (20,300 ) — — (56,600 ) (10,600 ) (19,500 )
Belgium 4,900 4,900 (5,200 ) 14,300 (13,400 ) 5,800 — — (7,600 )
8,900 13,000 Switzerland(11) 700 700 (15,900 ) 15,600 (23,000 )
5,700 — — (17,300 ) 15,900 17,000 Austria 5,600 5,600 800 9,300
(3,100 ) 1,000 — — (2,100 ) 6,400 5,000 Ireland (200 ) 2,800
(6,600 ) (2,900 ) (2,700 ) (2,600 ) — (1,900 ) (7,200 )
1,500 2,800 Total Western Europe 79,600
123,400 (82,500 ) 43,300 (97,800 ) (10,800 ) —
(1,900 ) (110,500 ) 84,300 69,500 Poland 31,200
31,200 (6,800 ) 12,600 (7,300 ) 3,800 — — (3,500 ) 6,700 9,400
Hungary 8,100 8,000 2,300 15,500 (8,000 ) 9,100 1,700 — 2,800 5,600
7,100 Romania 78,600 94,000 14,600 43,600 4,800 11,800 (4,400 ) —
12,200 16,800 14,600 Czech Republic 2,100 2,200 (100 ) 2,000 1,800
(2,200 ) 2,400 — 2,000 1,800 (1,800 ) Slovakia 2,800 2,500
(2,200 ) (1,700 ) (4,100 ) 700 600 (100 )
(2,900 ) 1,200 — Total CEE 122,800 137,900
7,800 72,000 (12,800 ) 23,200 300
(100 ) 10,600 32,100 29,300
Total Liberty Global Group
202,400 261,300 (74,700 ) 115,300 (110,600 )
12,400 300 (2,000 ) (99,900 ) 116,400 98,800
Chile 13,500 14,200 12,700 36,600 (3,900 ) 18,400 — —
14,500 22,800 (700 ) Puerto Rico 358,300 358,300
115,700 162,200 — 47,400 — —
47,400 94,200 20,600 Total LiLAC Group
371,800 372,500 128,400 198,800 (3,900
) 65,800 — — 61,900 117,000
19,900
Grand Total 574,200
633,800 53,700 314,100
(114,500 ) 78,200 300
(2,000 ) (38,000 ) 233,400
118,700
Organic Change
Summary:
U.K. 44,900 51,600 (7,700 ) 2,000 — (12,200 ) — — (12,200 ) 6,600
7,600 Germany 10,400 44,700 8,700 91,700 (19,300 ) 11,800 — —
(7,500 ) 55,600 43,600 The Netherlands 13,300 13,100 (56,600 )
(86,700 ) (36,300 ) (20,300 ) — — (56,600 ) (10,600 ) (19,500 )
Belgium 4,900 4,900 (5,200 ) 14,300 (13,400 ) 5,800 — — (7,600 )
8,900 13,000 Other Europe 102,000 123,100 (29,600 )
74,100 (55,100 ) 27,300 300 (2,000 ) (29,500 )
49,500 54,100
Total Liberty Global Group
175,500 237,400 (90,400 )
95,400 (124,100 ) 12,400
300 (2,000 ) (113,400 )
110,000 98,800 Chile 13,500 14,200
12,700 36,600 (3,900 ) 18,400 — — 14,500 22,800 (700 ) Puerto Rico
3,000 3,000 800 6,300 — (1,200 )
— — (1,200 ) 2,800 4,700
Total LiLAC
Group 16,500 17,200 13,500
42,900 (3,900 ) 17,200
— — 13,300
25,600 4,000 Total Organic Change
192,000 254,600 (76,900 ) 138,300 (128,000 )
29,600 300 (2,000 ) (100,100 ) 135,600 102,800
Q2 2015
Adjustments:
Acquisition - Puerto Rico 355,300 355,300 114,900 155,900 — 48,600
— — 48,600 91,400 15,900 Acquisition - Romania 26,900 23,900
15,700 19,900 13,500 — —
— 13,500 6,400 — Net Adjustments
382,200 379,200 130,600 175,800 13,500
48,600 — — 62,100 97,800
15,900 Net Adds (Reductions) 574,200 633,800
53,700 314,100 (114,500 ) 78,200 300
(2,000 ) (38,000 ) 233,400 118,700
Footnotes for Operating Data and Subscriber Variance Tables
_____________________________________________________________________________________________________________________________________
(1)
Homes Passed are homes, residential
multiple dwelling units or commercial units that can be connected
to our networks without materially extending the distribution
plant, except for DTH and Multi-channel Multipoint (“microwave”)
Distribution System (“MMDS”) homes. Our Homes Passed counts are
based on census data that can change based on either revisions to
the data or from new census results. We do not count homes passed
for DTH. With respect to MMDS, one MMDS customer is equal to one
Home Passed. Due to the fact that we do not own the partner
networks (defined below) used in Switzerland and the Netherlands
(see note 11) we do not report homes passed for Switzerland's and
the Netherlands' partner networks.
(2)
Two-way Homes Passed are Homes Passed by
those sections of our networks that are technologically capable of
providing two-way services, including video, internet and telephony
services.
(3)
Customer Relationships are the number of
customers who receive at least one of our video, internet or
telephony services that we count as Revenue Generating Units
(“RGUs”), without regard to which or to how many services they
subscribe. To the extent that RGU counts include equivalent billing
unit (“EBU”) adjustments, we reflect corresponding adjustments to
our Customer Relationship counts. For further information regarding
our EBU calculation, see Additional General Notes to Tables.
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 Customer Relationships. We
exclude mobile-only customers from Customer Relationships.
(4)
Revenue Generating Unit or "RGU" is
separately a Basic Video Subscriber, Enhanced Video Subscriber, DTH
Subscriber, MMDS Subscriber, Internet Subscriber or Telephony
Subscriber. A home, residential multiple dwelling unit, or
commercial unit may contain one or more RGUs. For example, if a
residential customer in our Austrian system subscribed to our
enhanced video service, telephony service and broadband internet
service, the customer would constitute three RGUs. Total RGUs is
the sum of Basic Video, Enhanced Video, DTH, MMDS, Internet and
Telephony Subscribers. RGUs generally are counted on a unique
premises basis such that a given premises does not count as more
than one RGU for any given service. On the other hand, if an
individual receives one of our services in two premises (e.g., a
primary home and a vacation home), that individual will count as
two RGUs for that service. Each bundled cable, internet or
telephony service is counted as a separate RGU regardless of the
nature of any bundling discount or promotion. Non-paying
subscribers are counted as subscribers during their free
promotional service period. Some of these subscribers may choose to
disconnect after their free service period. Services offered
without charge on a long-term basis (e.g., VIP subscribers, 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 June 30, 2015 RGU counts exclude
our separately reported postpaid and prepaid mobile
subscribers.
(5)
Basic Video Subscriber is a home,
residential multiple dwelling unit or commercial unit that receives
our video service over our broadband network either via an analog
video signal or via a digital video signal without subscribing to
any recurring monthly service that requires the use of
encryption-enabling technology. Encryption-enabling technology
includes smart cards, or other integrated or virtual technologies
that we use to provide our enhanced service offerings. With the
exception of RGUs that we count on an EBU basis, we count RGUs on a
unique premises basis. In other words, a subscriber with multiple
outlets in one premises is counted as one RGU and a subscriber with
two homes and a subscription to our video service at each home is
counted as two RGUs. In Europe, we have approximately 110,400
“lifeline” customers that are counted on a per connection basis,
representing the least expensive regulated tier of video cable
service, with only a few channels.
(6)
Enhanced Video Subscriber is a home,
residential multiple dwelling unit or commercial unit that receives
our video service over our broadband network or through a partner
network via a digital video signal while subscribing to any
recurring monthly service that requires the use of
encryption-enabling technology. Enhanced Video Subscribers that are
not counted on an EBU basis are counted on a unique premises basis.
For example, a subscriber with one or more set-top boxes that
receives our video service in one premises is generally counted as
just one subscriber. An Enhanced Video Subscriber is not counted as
a Basic Video Subscriber. As we migrate customers from basic to
enhanced video services, we report a decrease in our Basic Video
Subscribers equal to the increase in our Enhanced Video
Subscribers. Subscribers to enhanced video services provided by our
operations in Switzerland and the Netherlands over partner networks
receive basic video services from the partner networks as opposed
to our operations.
(7)
DTH Subscriber is a home, residential
multiple dwelling unit or commercial unit that receives our video
programming broadcast directly via a geosynchronous satellite.
(8)
MMDS Subscriber is a home, residential
multiple dwelling unit or commercial unit that receives our video
programming via a Multi-channel Multipoint ("microwave")
Distribution System.
(9)
Internet Subscriber is a home, residential
multiple dwelling unit or commercial unit that receives internet
services over our networks, or that we service through a partner
network. Our Internet Subscribers exclude 300 asymmetric digital
subscriber line (“ADSL”) subscribers within the U.K. and 62,100
digital subscriber line (“DSL”) subscribers within Austria that are
not serviced over our networks. Our Internet Subscribers do not
include customers that receive services from dial-up connections.
In Switzerland, we offer a 2 Mbps internet service to our Basic and
Enhanced Video Subscribers without an incremental recurring fee.
Our Internet Subscribers in Switzerland include 92,400 subscribers
who have requested and received this service.
(10)
Telephony Subscriber is 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. Our Telephony Subscribers exclude 500 and 46,000
subscribers within the U.K. and Austria, respectively, that are not
serviced over our networks. In Switzerland, we offer a basic phone
service to our Basic and Enhanced Video Subscribers without an
incremental recurring fee. Our Telephony Subscribers in Switzerland
include 39,900 subscribers who have requested and received this
service.
(11)
Pursuant to service agreements,
Switzerland and, to a much lesser extent, the Netherlands offer
enhanced video, broadband internet and telephony services over
networks owned by third-party cable operators (“partner networks”).
A partner network RGU is only recognized if there is a direct
billing relationship with the customer. At June 30, 2015,
Switzerland's partner networks account for 141,200 Customer
Relationships, 281,300 RGUs, 105,100 Enhanced Video Subscribers,
104,400 Internet Subscribers, and 71,800 Telephony 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 small or home office
(“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.” With the exception of our B2B SOHO
subscribers, we generally do not count customers of B2B services as
customers or RGUs for external reporting purposes.
Certain of our residential and commercial RGUs are counted on an
EBU basis, including residential multiple dwelling units and
commercial establishments such as bars, hotels and hospitals in
Chile and Puerto Rico and certain commercial and residential
multiple dwelling units in Europe (with the exception of Germany
and Belgium, where we do not count any RGUs on an EBU
basis). Our EBUs are generally calculated by dividing the bulk
price charged to accounts in an area by the most prevalent price
charged to non-bulk residential customers in that market for the
comparable tier of service. As such, we may experience variances in
our EBU counts solely as a result of changes in rates. In Germany,
homes passed reflect the footprint and two-way homes passed reflect
the technological capability of our network up to the street
cabinet, with drops from the street cabinet to the building
generally added, and in-home wiring generally upgraded, on an as
needed or success-based basis. In Belgium, Telenet leases a portion
of its network under a long-term capital 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150804007005/en/
Liberty GlobalInvestor
Relations:Oskar Nooij, +1 303 220 4218Christian
Fangmann, +49 221 84 62 5151John Rea, +1 303 220
4238orCorporate
Communications:Marcus Smith, +44 20 7190 6374Bert
Holtkamp, +31 20 778 9800Hanne Wolf, +1 303 220 6678
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