Total Q1 RGU Additions of 286,000 in Europe & LatAm, up
46% YoY
European Operating Income of $431 Million in Q1, Down 18%
YoY
Q1 Rebased OCF Growth of 4% in Europe, reaching $1.6
Billion
Network & Product Investments to Underpin LiLAC's Future
Growth
$1.0 Billion of LBTY Equity Repurchases & $20 Million at
LiLAC
Liberty Global plc ("Liberty Global") (NASDAQ: LBTYA, LBTYB,
LBTYK, LILA and LILAK), today announces financial and operating
results for the three months ("Q1") ended March 31, 2017 for the
Liberty Global Group1 and the LiLAC Group1.
CEO Mike Fries stated, "Our first quarter results in Europe
showed an acceleration in volume growth, as the mix of
market-leading broadband speeds, next-generation2 TV functionality
and new build activity underpinned this performance. We added
244,000 RGUs3 during Q1, a 40% increase4 compared to the prior-year
period, while successfully implementing price increases across
several European markets. This improvement in subscriber additions
was led by our operations in the U.K. and Germany, both of which
contributed to our best first quarter video performance in the last
ten years."
"In terms of our European financials, we had a soft start to the
year on the revenue front with 2% rebased5 growth in Q1, mainly due
to challenging mobile results in Belgium and the U.K. Of note, we
delivered a solid B2B6 performance with 9% rebased revenue growth
during the quarter, driven by robust SOHO and SME results.
Consistent with our projection for full-year growth to be back-end
loaded again this year, we generated 4% rebased OCF7 growth in Q1.
While most markets reported results consistent with our forecasts,
Virgin Media's cable ARPU8 was softer than planned, partly due to
discounting and mix effect, as well as a decline in mobile revenue.
Virgin's 1% rebased OCF growth in the first quarter also reflected
significant investment in our U.K. marketing efforts, emphasizing
our competitive advantage on broadband speeds, TV superiority
bolstered by Virgin's new 4K set-top box and our attractive new 4G
quad-play offerings. These investments should allow us to deliver
better results in the second half of this year. However, we now
anticipate our 2017 full-year rebased OCF growth to be around 5%
for Liberty Global Group."
"With respect to Project Lightning, we previously reported a
reboot9 of the program along with leadership changes. This
transformation includes the appointment of a new Lightning
management team reporting to Liberty’s central T&I group and a
detailed review of the program with a view towards ramping our
construction activity over the next 12 to 24 months. Although we
delivered 102,000 new premises at Virgin Media in Q1 and a total of
around 700,000 homes to date, we expect that the management
transition and related review is likely to result in a
slower build pace than what we previously expected for 2017. We
will provide an update after our second quarter. Our new build
plans throughout the rest of continental Europe10 are progressing
well."
"As expected, we faced a challenging first quarter at LiLAC due
to the comparison against CWC’s11 prior-year OCF result, which was
an anomaly when compared to preceding and subsequent quarters.
However, our businesses in Chile and Puerto Rico continued to
perform strongly, with rebased OCF increases of 12% and 10%,
respectively. And we continue laying the building blocks to
accelerate LiLAC's growth profile over the next several years. In
addition to our network extension investments, we are putting the
finishing touches on CWC's new operating model and organizational
structure. With most key roles at LiLAC and CWC having been filled,
we are beginning to see the benefits from the progress we have made
post-acquisition. For example, we had encouraging results on the
subscriber front, as we added 42,000 RGUs across the region,
including 10,000 at CWC, driven by our product investments and
evolving go-to-market strategies. Going forward, we continue to
anticipate approximately $1.5 billion12 of OCF for full-year 2017
and are preparing for the hard spin of LiLAC Group towards the end
of the year."
"During the first four months of the year, we took advantage of
favorable capital market conditions and refinanced nearly $8
billion of debt across credit pools in both Europe and Latin
America in order to lengthen our maturity profile and further
reduce interest costs. At the Liberty Global plc level, our average
tenor13 at March 31 was over seven years, with a fully-swapped
borrowing cost14 of 4.9%. In combination with our substantial
liquidity position15 of $6.7 billion at quarter-end, our balance
sheet remains in great shape. In addition, we took advantage of the
attractive trading levels for both of our stocks during Q1, ramping
the repurchases of our European equity to $1 billion, or one-third
of our full-year target, while also repurchasing around $20 million
of LiLAC Group equity. Looking ahead, we will remain opportunistic
in terms of managing our capital structure, as our levered-equity
approach remains a core pillar of our long-term value creation
strategy."
European Highlights Q1
2017
- Organic customer relationship16 growth
of 40,000 in Q1 2017
- Fueled by strong quarterly additions in
the U.K. and MDU contributions in Germany
- Organic RGU growth was up 40%
year-over-year with 244,000 net additions in Q1
- Our video attrition improved materially
to a loss of just 15,000 RGUs
- Our mobile base now stands at 6.4
million subscribers17, including 5.1 million or 80% postpaid
- 91,000 organic postpaid mobile
additions, driven by Belgium and the U.K.
- Rebased revenue growth of 2%, driven
by:
- Residential fixed18 to $2.6 billion at
Q1 2017, up 2% year-over-year
- B2B (incl. SOHO) up 9% year-over-year
to $0.4 billion in Q1 2017
- Consumer mobile (incl. handset &
interconnect) declined 5% YoY to $0.4 billion at Q1 2017
- Q1 operating income declined 18%
year-over-year to $431 million
- Rebased OCF growth of 4%, softened by
1% rebased growth at Virgin Media
- Delivered over 200,000 new premises,
including 102,000 at Virgin Media in Q1
- Continue to expect $1.5 billion of
adjusted free cash flow19 in 2017
Liberty Global Group (Europe)
Q1 2017
YOYGrowth/(Decline)*
Subscribers
Organic RGU Net Additions 244,300 40.0 %
Financial (in USD
millions, unless noted)
Revenue $ 3,519 2.1 % OCF $ 1,605 4.1 % Operating income $ 431
(18.1 %) Adjusted FCF $ (333 ) 217.1 % Cash provided by
operating activities $ 903 Cash provided by investing activities $
1,891 Cash used by financing activities $ (1,783 )
* For the RGU growth rate the Netherlands
is excluded from the Q1 2016 figure; Revenue and OCF YoY growth
rates are on a rebased basis.
LiLAC Highlights Q1 2017
- Record organic customer additions of
33,000, reversing most of the Q4 2016 declines
- Organic RGU additions up 97%
year-over-year totaling 42,000, driven by broadband
- CWC contributed 10,000 RGU additions
compared to a loss of 20,000 RGUs in Q4 2016
- Rebased revenue growth in Chile and
Puerto Rico at 7% and 3%, respectively
- Operating income up 130% year-over-year
to $138 million
- Rebased OCF decline of 10% YoY,
impacted by challenging prior-year comparison at CWC
- Double-digit rebased OCF growth of 12%
in Chile and 10% in Puerto Rico
- New build/upgrade progressing well, led
by Chile and Panama
Liberty Latin America &
Caribbean Q1 2017
YOYGrowth/(Decline)*
Subscribers
Organic RGU Net Additions 41,900 96.7 %
Financial (in USD
millions, unless noted)
Revenue $ 911 (0.8 %) OCF $ 354 (9.6 %) Operating income $ 138
130.0 % Adjusted FCF $ (58 ) (391.5 %) Cash provided by
operating activities $ 76 Cash used by investing activities $ (130
) Cash provided by financing activities $ 29
* Revenue and OCF YoY growth rates are on
a rebased basis.
Subscriber Growth - Liberty Global
Group (Europe)
Three months ended March 31,
2017 2016 Organic RGU net
additions (losses) by product (excluding NL)(4) Video (15,100 )
(97,700 ) Data 154,400 145,200 Voice 105,000 127,000
Total Liberty Global Group
244,300 174,500
Organic RGU net additions
(losses) by market U.K./Ireland 158,000 92,900 Germany 52,400
23,600 Belgium (12,000 ) 6,300 Switzerland/Austria (2,400 ) (12,000
) Central and Eastern Europe 48,300 63,700 Total
Liberty Global Group 244,300 174,500
Organic Mobile SIM additions (losses) by product Postpaid
91,200 88,600 Prepaid (73,000 ) (66,500 ) Total Liberty Global
Group 18,200 22,100
Organic Mobile SIM
additions (losses) by market U.K./Ireland 3,400 (16,100 )
Belgium 3,500 17,800 Other 11,300 20,400 Total
Liberty Global Group 18,200 22,100
- Cable Product
Performance: we added 244,000 RGUs, up 40% YoY when
excluding the Netherlands from our Q1 2016 result. This
acceleration was driven by materially lower video attrition, which
was reduced by 83,000 RGUs, mainly related to our improved
performances in the U.K. and Germany. Broadband growth was sightly
up (added 9,000 more RGUs), while telephony RGU growth slowed
(added 22,000 fewer RGUs) as compared to the RGU additions in Q1
2016
- The improved video trend was supported
by our new build programs across Europe, the U.K. in particular,
and success in the MDU segment in Germany
- Next-Generation
TV platforms (including Horizon TV, Horizon-Lite, TiVo, Eos
(v6) and Yelo TV): we added 253,000 subscribers, as our
next-generation subscriber base reached 6.9 million, representing
39% of our total video base (excluding DTH) in Europe
- Take-up of our new 4K enabled "Virgin
TV V6" set-top box was robust in Q1 and customer satisfaction for
this product has been significantly higher than our prior device.
This new box is expected to be rolled out across additional markets
later this year
- Added the popular Netflix app to our
Horizon platform in Germany in March, offering convenience and more
on-demand content, and it is now available in four countries
- WiFi Connect
Box: investing in best-in-class connectivity to enhance the
customer experience by rolling out our WiFi Connect boxes. As of
March 31, 2017, we have 3.7 million boxes installed across Europe,
representing 26% penetration of our broadband base
- The average broadband speed of our
internet subscribers was 108 Mbps and on average they consumed
121GB of data per month during Q1
- U.K./Ireland: delivered accelerated RGU growth
with 158,000 additions in Q1, up 70% YoY. Of particular note was
our U.K. video performance with 46,000 RGU additions, a 53,000
improvement year-over-year. This result was supported by our
network extension program and our new 4K set-top box. RGU attrition
in Ireland was reduced from 17,000 in Q1 2016 to 5,000 this
quarter, boosted by improvements across all products
- Germany:
delivered 52,000 RGU gains in Q1, while implementing price
increases for four million subscribers. Sales remained steady
during Q1 on the back of our new spring campaign and enhanced
product portfolio, highlighting our 400Mbps top speed, which has
improved our tier mix. Germany's video result improved by 34,000
RGUs YoY with support from a strong MDU video business
- Belgium:
Q1 attrition of 12,000 RGUs was primarily related to intensified
competition and the announcement of certain price increases. This
mainly impacted our stand-alone video subscribers resulting in a
video loss of 21,000 RGUs. On the broadband and fixed telephony
fronts, we delivered 6,000 and 3,000 RGU additions, respectively,
and were able to drive our "WIGO" all-in-one converged bundle
penetration to 9% of our fixed-line customer base at the end March
31, 2017
- Switzerland/Austria: lost 2,000 RGUs in Q1, a
10,000 improvement as compared to Q1 2016, all related to an
improved fixed telephony performance. Aggressive marketing efforts
and new bundles from competitors impacted the sequential RGU
growth. Our Swiss "Connect" and "Connect & Play" portfolios
will be enriched with an exclusive sports channel called "MySports"
that we plan to launch in Q3 to further differentiate our product
offer
- CEE:
posted 48,000 RGU additions, with a stable video and improved
internet performance that was more than offset by lower fixed
telephony additions as compared to Q1 2016. From a country
perspective, the lower year-over-year performance was mainly
related to our performance in Poland, driven by lower fixed
telephony and broadband internet additions, attributable to
increased competition, and lower video additions in Hungary (DTH
related)
- Mobile17:
added 18,000 mobile subscribers, as 91,000 postpaid subscriber
additions were largely offset by 73,000 prepaid subscriber losses
- Virgin Media's subscriber base in the
U.K. declined by 7,000 SIM cards in Q1 as 27,000 postpaid additions
were more than offset by low-ARPU prepaid subscriber losses. As of
March 31, 2017, 21% of our U.K. postpaid mobile base had a 4G
contract, just five months after launch. In Ireland, we gained
10,000 subscribers, a record quarterly result
- Telenet in Belgium delivered 43,000
postpaid additions in Q1, supported by the continued success of
"WIGO" and a refreshed BASE20 postpaid offering. This solid
performance was largely offset by declines in our prepaid base of
40,000 during Q1 2017
Revenue Highlights - Liberty Global Group (Europe)
The following table presents (i) revenue of each of our
reportable segments for the comparative periods, and (ii) the
percentage change from period to period on a reported and a rebased
basis:
Three Months ended
March 31,
Increase/(decrease)
Revenue
2017 2016 % Rebased %
in millions, except % amounts European Division:
U.K./Ireland $ 1,504.4 $ 1,686.5 (10.8 ) 1.7 Belgium 661.4 610.2
8.4 0.8 Germany 629.1 617.1 1.9 5.6 Switzerland/Austria 423.7 433.4
(2.2 ) (1.3 ) The Netherlands — 669.8 * *
Total Western Europe 3,218.6 4,017.0 (19.9 ) 1.8 Central and
Eastern Europe 271.3 266.1 2.0 5.2 Central and other 28.7
(2.4 ) N.M. (0.7 ) Total European Division 3,518.6 4,280.7
(17.8 ) 2.1 Corporate and other 0.4 14.6
N.M.
— Intersegment eliminations — (11.2 ) N.M. *
Total Liberty Global Group $ 3,519.0 $ 4,284.1 (17.9
) 2.1
* - Omitted; N.M. - Not Meaningful
- Reported revenue for the three months
ended March 31, 2017 declined 18% year-over-year
- This decline was primarily driven by
the net impact of (i) the deconsolidation of our operations in the
Netherlands in connection with the completion of our joint venture
with Vodafone Group plc (the "VodafoneZiggo JV"), (ii) negative
foreign exchange ("FX") movements, mainly related to the
strengthening of the U.S. dollar against the British pound, and
(iii) our organic revenue growth
- Rebased revenue grew 2% during the Q1
2017 period despite the net negative impact of certain items, the
most significant of which include:
- The net negative impact of our mobile
split-contract program21 in the U.K. totaling $26 million
- A reduction in cable subscription
revenue of $9 million resulting from a change in U.K. regulations
governing payment handling fees that Virgin Media charges its
customers
- The favorable $6 million impact of the
expected recovery of VAT paid in prior periods with respect to
copyright fees in Belgium
- In Q1 2017, the Liberty Global Group
recognized $31.5 million of revenue from the VodafoneZiggo JV
pursuant to the framework agreement that governs the services that
we provide to the VodafoneZiggo JV. Our rebased growth calculations
include an estimate of the revenue from the framework agreement for
the three months ended March 31, 2016 as if the framework agreement
had been in place at the beginning of 2016
- Our B2B (including SOHO) and mobile
(including interconnect and handset sales) businesses reported 9%
rebased revenue growth and a 5% rebased revenue contraction,
respectively, in Q1
- Contraction of mobile revenue was due
to the 9% and 7% rebased revenue declines in the U.K. and Belgium,
respectively, which together represent over 90% of our mobile
business
- The decline was related to (i) the
aforementioned reduction in revenue associated with our mobile
split-contract program in the U.K. and (ii) continued declines in
mobile interconnect revenue
Q1 2017 Rebased Revenue Growth - Segment
Highlights
- U.K./Ireland: overall 2% growth includes:
- Cable subscription (including SOHO)
(~70% of revenue) rebased growth of 3%, driven by the net effect of
(i) accelerating RGU growth to 317,000 over the LTM period, (ii) a
1% increase in ARPU per RGU on an FX-neutral basis and (iii) the
aforementioned $9 million reduction in Q1 related to payment
handling fees
- A rebased revenue decline in Q1 of 9%
in our mobile business (including interconnect and mobile handset
revenue), primarily due to the impact of the split-contract
program, as mentioned above
- Rebased business revenue (excluding
SOHO) growth of 1%, mainly driven by higher underlying data
volumes
- Belgium:
rebased growth rate of 1% was driven by the net effect of (i)
higher cable subscription revenue, mainly related to a 2% increase
in ARPU per RGU, (ii) growth in B2B and (iii) the mobile revenue
headwinds highlighted above
- Germany:
rebased revenue growth of 6% was largely attributable to (i) higher
cable subscription revenue (~90% of revenue), as a result of adding
nearly 350,000 subscribers over the LTM period and a 2% increase in
ARPU per RGU and (ii) higher low-margin mobile handset revenue
- Switzerland/Austria: rebased revenue decline of 1%
was mainly due to lower ARPU per RGU, primarily related to a weaker
tier-mix in combination with limited volume growth, which was only
partially offset by solid mobile subscriber additions
- CEE:
rebased revenue growth of 5%, mainly driven by new build related
subscriber growth that was only partially offset by lower ARPU per
RGU in most countries
Operating Income - Liberty Global Group (Europe)
- Operating income of $431 million and
$527 million in Q1 2017 and Q1 2016, respectively, representing a
decrease of 18%
- The decrease in operating income was
primarily impacted by decreases in (i) OCF, as further described
below, and (ii) depreciation and amortization
Operating Cash Flow Highlights - Liberty Global Group
(Europe)
The following table presents (i) OCF of each of our reportable
segments for the comparative periods, and (ii) the percentage
change from period to period on a reported and a rebased basis:
Three months ended
March 31,
Increase/(decrease)
OCF 2017 2016 %
Rebased % in millions, except % amounts
European Division: U.K./Ireland $ 648.5 $ 744.6 (12.9 ) 0.9 Belgium
297.9 269.8 10.4 8.4 Germany 382.8 379.4 0.9 4.6
Switzerland/Austria 255.1 258.1 (1.2 ) (0.3 ) The Netherlands —
367.9 * * Total Western Europe 1,584.3
2,019.8 (21.6 ) 2.9 Central and Eastern Europe 111.0 110.9 0.1 3.7
Central and other (42.0 ) (84.3 ) 50.2 23.6 Total
European Division 1,653.3 2,046.4 (19.2 ) 3.9 Corporate and other
(48.6 ) (52.8 ) 8.0 1.8 Total Liberty Global Group $
1,604.7 $ 1,993.6 (19.5 ) 4.1 OCF
Margin 45.6 % 46.5 %
* - Omitted; N.M. - Not Meaningful
- Reported OCF for the three months ended
March 31, 2017 declined 20% year-over-year
- Mainly result of the net effect of (i)
the deconsolidation of our operations in the Netherlands, (ii) the
adverse impact of FX movements mentioned above and (iii) organic
OCF growth
- Rebased OCF growth of 4% in Q1 2017
included the net negative impact of certain items, the most
significant of which included:
- The net unfavorable revenue items
discussed in the "Revenue Highlights" section above
- A $6 million headwind associated with
the settlement of an operational contingency in the U.K. during the
first quarter of 2016
- As compared to the prior-year period,
our Q1 2017 OCF margin22 was negatively impacted by the
deconsolidation of the Netherlands
Q1 2017 Rebased Operating Cash Flow Growth
- Segment Highlights
- U.K./Ireland: 1% rebased OCF growth as the
increase in rebased revenue was offset by higher programming costs,
higher marketing spend mainly related to our Virgin TV V6, Virgin
Fibre and Virgin Mobile campaigns and higher network expenses
- Belgium:
rebased OCF growth of 8% was largely driven by the aforementioned
favorable impact of the expected recovery of prior-period VAT
payments ($6m), lower handset sales/subsidies and indirect cost
containment, partially offset by higher programming and copyright
costs
- Germany:
grew rebased OCF by 5% primarily as a result of the net impact of
previously-mentioned revenue growth drivers, including the impact
of low-margin handset sales, and (i) higher staff-related costs,
(ii) higher direct costs, largely due to increased mobile handset
sales, (iii) higher customer service-related costs and (iv) lower
network related costs
- Switzerland/Austria: flat rebased OCF result as
the 1% rebased revenue contraction was offset by lower SG&A
expense and indirect cost controls
- CEE:
rebased OCF growth of 4% was primarily driven by aforementioned
revenue growth, partially offset by increases in (i) programming
and copyright costs, primarily in Hungary, Romania and Poland, (ii)
interconnect costs, primarily in the Czech Republic, and (iii)
network-related expenses, primarily in Romania
- Central and
other: year-over-year rebased improvement due to (i) lower
staff-related costs and (ii) lower costs associated with our
Liberty Go initiative
Net Loss - Liberty Global Group (Europe)
- Net loss was $293 million and $334
million for the three months ended March 31, 2017 and 2016,
respectively
Property and Equipment Additions - Liberty Global Group
(Europe)
- Beginning January 1, 2017, we changed
the categories of our Property and Equipment additions23 from the
National Cable & Telecommunications Association ("NCTA")
classification approach to a new categorization, which aligns to
our internal categories. We also applied this change retroactively
to the prior-year period. The new categories are:
- Customer Premises Equipment: includes
capitalizable equipment and labor, materials and other costs
directly associated with the installation of such CPE
- New Build & Upgrade: includes
capitalizable costs of network equipment, materials, labor and
other costs directly associated with entering a new service area
and upgrading our existing network
- Capacity: includes capitalizable costs
for network capacity required for growth and services expansions
from both existing and new customers. This category covers Core and
Access parts of the network and includes, for example, fiber node
splits, upstream/downstream spectrum upgrades and optical equipment
additions in our international backbone connections
- Baseline: includes capitalizable costs
of equipment, materials, labor and other costs directly associated
with maintaining and supporting the business. Relates to areas such
as network improvement, property and facilities, technical sites,
information technology systems and fleet
- Product & Enablers: discretionary
capitalizable costs include investments (i) required to support,
maintain, launch or innovate in new customer products, and (ii) in
infrastructure, which drive operational efficiency over the long
term
The details of our property and equipment additions are as
follows:
Three months ended March 31,
2017 2016
in millions, except
%amounts
Customer premises equipment $ 296.0 $ 236.2 New Build & Upgrade
189.8 151.0 Capacity 116.6 106.3 Baseline 156.3 174.5 Product &
Enablers 125.7 117.4 Property and equipment additions
(excluding the Netherlands) 884.4 785.4 The Netherlands —
140.1 Total property and equipment additions $ 884.4
$ 925.5 Property and equipment additions as % of
revenue (excluding the Netherlands) 25.1 % 21.7 %
- Increase in property and equipment
additions in absolute terms and as a percentage of revenue was
primarily driven by (i) higher CPE spend year-over-year in the U.K.
and Germany and (ii) increased new build activities across our
footprint, in the U.K. in particular, partly offset by lower
baseline spend, primarily at Virgin Media
Consolidated Statements of Cash Flows - Liberty Global Group
(Europe)
Three months ended March
31, 2017 2016
Variance in millions
Net cash provided (used) by:
Operating Activities $ 902.8 $ 1,020.8 $ (118.0 ) Investing
Activities $ 1,890.7 $ (1,879.3 ) $ 3,770.0 Financing Activities $
(1,783.1 ) $ 788.5 $ (2,571.6 )
- Operating
Activities: the decrease in cash provided was primarily
attributable to the net effect of (i) a decrease in cash provided
by OCF and related working capital items, including a decrease due
to the completion of the VodafoneZiggo JV transaction, (ii) higher
cash receipts related to derivative instruments, (iii) higher
payments for taxes and (iv) a decrease due to unfavorable movements
in FX
- Investing
Activities: the change in net cash provided (used) by
investing activities was primarily attributable to an increase in
cash related to (i) distributions received from affiliates, (ii)
lower payments for acquisitions, (iii) the equalization payment
received in connection with the completion of the VodafoneZiggo JV
transaction and (iv) lower capital expenditures
- Financing
Activities: the change in net cash provided (used) by
financing activities was primarily attributable to (i) higher net
repayments and repurchases of debt and capital lease obligations
and (ii) higher cash payments associated with the repurchase of
shares
Adjusted Free Cash Flow - Liberty Global Group
(Europe)
Three months ended March 31,
2017 2016 in millions Adjusted
Free Cash Flow $ (332.6 ) $ (104.9 )
- The Q1 adjusted free cash flow decrease
of $228 million, as compared to the prior-year period, was
attributable to the net effect of:
- Lower cash provided from OCF and
related working capital items
- Lower interest payments (including
related derivative instruments)
- Favorable movements in FX
- Higher cash taxes
- Lower capital expenditures
- The impact of the VodafoneZiggo JV
transaction accounted for a significant portion of the above
decreases
- On a net basis, our vendor financing
programs resulted in approximately $25 million higher adjusted free
cash flow in Q1 2017, as compared to Q1 2016
Leverage and Liquidity - Liberty Global Group (Europe - at
March 31, 2017)
- Total capital
leases and principal amount of third-party debt: $38.5
billion
- Leverage
ratios: Our adjusted gross and net leverage ratios24 at
March 31, 2017 were 5.3x and 5.0x, respectively
- Average debt
tenor13 : approximately 7.5 years, with ~90% not due until
2021 or beyond
- Borrowing
costs14: blended fully-swapped borrowing cost of our
third-party debt was 4.6%
- Liquidity:
$5.1 billion, including (i) $2.1 billion of cash at March 31, 2017,
and (ii) aggregate unused borrowing capacity25 under our credit
facilities of $3.0 billion
VodafoneZiggo Joint Venture (not consolidated) - Liberty
Global Group
Our noncontrolling 50% interest in the VodafoneZiggo JV is
attributed to Liberty Global Group. VodafoneZiggo is a leading
Dutch company that provides fixed, mobile and integrated
communication and entertainment services to consumers and
businesses. The unaudited financial and operating information set
forth below is preliminary and subject to change.
VodafoneZiggo highlights for Q1 2017*:
- Total pro forma revenue decline of 2%;
€6 million of decline due to impact of mobile regulation
- Stable fixed-line pro forma revenue and
lower fixed RGU attrition in Q1; loss of 5,000 in Q1 compared to
40,000 in Q1 2016
- Pro forma mobile (consumer and SOHO)
revenue decline of 7% driven by increasing competition and
regulation
- Pro forma B2B (fixed and mobile for
medium to large enterprises) revenue growth of 1%
- Operating income decreased 30% on a pro
forma basis in Q1 2017 to €53 million
- OCF** decline of 6% on a pro forma
basis, primarily resulting from lower revenue
- New convergence propositions launched
in April, providing significant cross-selling opportunity
* VodafoneZiggo (formerly known as Ziggo Group Holding B.V.)
is a wholly-owned subsidiary of VodafoneZiggo Group Holding B.V.
("VodafoneZiggo JV"), a 50:50 joint venture between Vodafone Group
plc ("Vodafone") and Liberty Global. Prior to December 31, 2016,
the predecessor of VodafoneZiggo was a wholly-owned subsidiary of
Liberty Global. On December 31, 2016, Liberty Global and Vodafone
completed a transaction (the "JV Transaction") whereby (i)
VodafoneZiggo became a wholly-owned subsidiary of the VodafoneZiggo
JV and (ii) Vodafone Libertel B.V. ("Vodafone NL"), the entity that
owns Vodafone’s mobile operations in the Netherlands, became a
wholly-owned subsidiary of VodafoneZiggo. In connection with the
closing of the JV Transaction, the VodafoneZiggo JV recorded all of
its assets and liabilities at fair value. As the entity contributed
to the VodafoneZiggo JV by Liberty Global is considered to be the
predecessor of VodafoneZiggo for financial reporting purposes, the
historical consolidated financial statements for VodafoneZiggo do
not include Vodafone NL for periods prior to December 31, 2016. In
order to provide meaningful comparisons, the preliminary financial
and operating information presented herein for the 2016 period is
presented on a pro forma basis that gives effect to, among other
items, (i) the inclusion of the financial and operating information
of Vodafone NL (excluding Vodafone Thuis) as of and for the three
months ended March 31, 2016, (ii) the impacts of the fair value
accounting applied to the opening balance sheet of VodafoneZiggo in
connection with the closing of the JV Transaction, (iii) the
services provided to VodafoneZiggo by Vodafone and Liberty Global
pursuant to a “Framework Agreement” that was entered into in
connection with the JV Transaction; (iv) the elimination of
historical related-party charges from Vodafone and Liberty that
will not continue in the periods following the JV Transaction, with
each adjustment recorded as if the JV Transaction had occurred on
January 1, 2015. VodafoneZiggo financial information is denominated
in euro, its functional currency, and reported in accordance with
U.S. GAAP. ** OCF for VodafoneZiggo is defined on a basis
consistent with Liberty Global. For the definition of OCF see note
7. A reconciliation of operating income to OCF is presented below
(in millions).
Three months ended March
31, 2017 2016 Pro forma
Operating income € 53.2
€
76.0 Share-based compensation expense 2.7 2.8 Depreciation and
amortization 375.3 376.8 Impairment, restructuring and other
operating items, net 0.2 2.7 OCF
€
431.4 € 458.3
The following table sets forth selected operating statistics of
VodafoneZiggo.
March 31, 2017
2016
Fixed-line
Subscribers (RGUs)(a)
Basic Video 619,300 736,500 Enhanced Video 3,338,200
3,307,900 Total Video 3,957,500 4,044,400 Internet 3,188,600
3,108,900 Telephony 2,538,900 2,535,000 Total RGUs 9,685,000
9,688,300 Fixed Customer Relationships 3,960,300
4,046,500
Mobile
Subscribers (a) (pro forma for March 31,
2016)
Postpaid 4,066,900 4,055,600 Prepaid 1,006,300 1,171,100
Total Mobile subscribers 5,073,200 5,226,700
(a) As defined by VodafoneZiggo.
Subscriber Growth - LiLAC Group
Three months ended March 31,
2017 2016 Organic RGU net
additions (losses) by product Video 5,200 3,500 Data 38,600
25,500 Voice (1,900 ) (7,700 ) Total LiLAC Group 41,900
21,300
Organic RGU net additions by market CWC
9,900 — Chile 25,400 16,200 Puerto Rico 6,600 5,100
Total LiLAC Group 41,900 21,300
Organic
Mobile SIM additions (losses) by product Postpaid 12,100 1,000
Prepaid 27,000 (1,000 ) Total LiLAC Group 39,100 —
Organic Mobile SIM additions by market CWC
26,600 — Chile 12,500 — Puerto Rico — — Total LiLAC
Group 39,100 —
- Product
Additions: organic RGU additions increased 97%
year-over-year to 42,000 as Chile, Puerto Rico and CWC all
contributed to improved RGU performance
- This performance was led by a 51%
increase in broadband RGU additions, as we added 39,000 subscribers
in Q1 along with a significant reduction in fixed-line voice
attrition, while organic video RGU growth remained relatively
stable
- Chile:
VTR's market-leading HD channel line-up, cutting-edge
video-on-demand user interface and broadband speed leadership
fueled improved results across all three fixed-line products,
delivering 25,000 organic RGU additions in Q1. Broadband adds of
27,000 RGUs marked our best Q1 since 2006 as VTR reinforced its
best-in-class "Vive Mas" bundles with speed upgrades
- Puerto
Rico: LCPR reported 7,000 subscriber additions supported by
market-leading broadband speeds of up to 400 Mbps in certain areas
(with the speed in our core bundle at 60 Mbps) and a rich variety
of video packages, including cost-effective Spanish speaking
bundles and the successful introduction of UPick "skinny bundles"
in late 2016
- Panama: we
continued to build momentum through our revitalized go-to-market
approach, adding 8,000 organic RGUs. We added 2,000 internet and
2,000 cable video RGUs in Q1, as our bundled offers gained traction
through network investments enabling faster speeds of up to 300
Mbps. We also grew our DTH base by 3,000 subscribers, targeting
areas where we do not provide video through our HFC network
- Jamaica:
fixed-line telephony and internet RGUs grew, however this was
offset by video declines
- Bahamas:
we added 2,000 RGUs in Q1 with momentum steadily building as we
increased penetration of our newly constructed Fiber-to-the-Home
(FttH) network
- Barbados:
RGUs declined by 2,000, primarily resulting from a decline in
fixed-line telephony subscribers. We saw stability across video and
internet as we improved service quality across our fixed network,
which was a significant improvement compared to combined losses of
5,000 in Q4 2016 across these two products
- Mobile: we
added 39,000 mobile subscribers in the first quarter, driven by
prepaid gains in Panama (49,000) and continued postpaid success in
Chile (13,000) that were only partially offset by losses across
other CWC businesses, including Jamaica (10,000) and the Bahamas
(6,000)
- Panama:
our prepaid mobile subscriber base grew in the quarter as we
launched targeted data-led promotions and benefited from the
seasonal Carnival uplift
- Jamaica:
the mobile subscriber base remained above 900,000, however, we saw
a decline in Q1, primarily prepaid churn, following increased
promotional activity in Q4 2016
- Bahamas:
entry of first mobile competitor in November 2016 led to subscriber
decline
- Chile:
subscribers increased as we continued to focus on penetrating our
fixed subscriber base, adding nearly 50,000 postpaid subscribers
over the past twelve months
Revenue Highlights - LiLAC Group
On May 16, 2016, a subsidiary of Liberty Global acquired CWC.
Accordingly, CWC has been included in our financial results under
our U.S. GAAP accounting policies since the acquisition date.
The following table presents (i) revenue of each of our
reportable segments for the comparative periods and (ii) the
percentage change from period to period on a reported and a rebased
basis:
Three months ended
March 31,
Increase/(decrease)
Revenue 2017 2016 %
Rebased % in millions, except % amounts
LiLAC Division: CWC $ 575.6 $ — * (4.1 ) Chile 229.3 200.0 14.7 7.1
Puerto Rico 106.7 103.9 2.7 2.7 Total
LiLAC Division 911.6 303.9 200.0 (0.8 ) Intersegment eliminations
(0.7 ) — N.M. — Total LiLAC Group $ 910.9
$ 303.9 199.7 (0.8 )
* - Omitted; N.M. - Not Meaningful
- Reported revenue for the three months
ended March 31, 2017 increased by 200%
- The Q1 result was primarily driven by
the acquisition of CWC and beneficial movements of the Chilean peso
relative to the U.S. dollar
- From a rebased perspective, revenue
decreased 1% for the three months ended March 31, 2017
Q1 2017 Rebased Revenue Growth - Segment
Highlights
- CWC:
rebased revenue decline of 4% as we experienced weakness primarily
in our mobile and fixed-line telephony segments. The decrease in
mobile revenue was mainly driven by a decline in the Bahamas, where
competition increased and we reduced roaming rates year-over-year,
partially offset by continued mobile growth in Jamaica
- Chile:
robust rebased revenue growth of 7% for Q1 2017 was primarily
related to higher ARPU per RGU and an increase in the average
number of subscribers as well as increased mobile subscription
revenue, driven by subscriber growth and, to a much lesser degree,
higher ARPU
- Puerto
Rico: rebased revenue growth of 3% was driven by subscriber
growth and Puerto Rico's B2B business
Operating Income - LiLAC Group
- Operating income of $138 million and
$60 million in Q1 2017 and Q1 2016, respectively, representing an
increase of 130%
- The increase in operating income, which
was primarily driven by increases in (i) OCF, as further described
below, and (ii) depreciation and amortization, was largely due to
the inclusion of CWC
Operating Cash Flow Highlights - LiLAC Group
The following table presents (i) OCF of each of our reportable
segments for the comparative periods, and (ii) the percentage
change from period to period on a reported and a rebased basis:
Three months ended
March 31,
Increase/(decrease)
OCF 2017 2016 %
Rebased % in millions, except % amounts
LiLAC Division: CWC $ 213.1 $ — * (19.4 ) Chile 91.6 76.3 20.1 12.1
Puerto Rico 51.3 46.8 9.6 9.6
Total LiLAC Division 356.0 123.1 189.2 (9.4 ) Corporate and other
(2.1 ) (1.2 ) (75.0 ) (75.0 ) Total segment OCF $ 353.9 $
121.9 190.3 (9.6 ) OCF Margin 38.9 % 40.1 %
* - Omitted; N.M. - Not Meaningful
- Reported OCF for the three months ended
March 31, 2017 increased 190% primarily as a result of the
aforementioned revenue drivers, including the impact associated
with the acquisition of CWC
- From a rebased perspective, OCF
decreased 10% for the three months ended March 31, 2017
Q1 2017 Rebased OCF Growth - Segment
Highlights
- CWC: as
previously identified we faced a challenging first quarter due to
the comparison against CWC’s prior-year OCF result, which was an
anomaly when compared to preceding and subsequent quarters. Rebased
OCF declined 19% due to a combination of (i) lower revenue of $31
million, (ii) the impact of non-recurring items that positively
impacted the prior period, including an $8 million vendor credit,
(iii) increased programming costs primarily related to the Premier
League, (iv) increased costs associated with Hurricane Matthew and
bad debts, and (v) increases in certain other costs, including
network and marketing expenses, as CWC had lower spend in these
areas during the Q1 2016 pre-acquisition period. These factors were
partially offset by reduced bonus costs in Q1 2017
- Chile:
increase was driven by the aforementioned revenue growth and lower
interconnect charges, partially offset by an increase in costs
associated with our mobile network, higher mobile handset costs and
higher call center costs
- Puerto
Rico: increase supported by revenue growth and ongoing cost
containment across the business
Net Loss - LiLAC Group
- Net losses were $11 million and $39
million for the three months ended March 31, 2017 and 2016,
respectively
Property and Equipment Additions - LiLAC Group
- Beginning January 1, 2017, we changed
the categories of our Property and Equipment additions23 from the
National Cable & Telecommunications Association ("NCTA")
classification approach to a new categorization, which aligns to
our internal categories. We applied this change retroactively to
the prior year period. For a description of these new categories
please see Property and Equipment Additions - Liberty Global
Group.
Three months ended March 31,
2017 2016
in millions, except
%amounts
Customer premises equipment $ 45.4 $ 38.6 New Build & Upgrade
14.6 13.8 Capacity 9.4 7.6 Baseline 7.6 5.0 Product & Enablers
1.7 6.5 CWC 60.5 — Property and equipment additions $
139.2 $ 71.5 Property and equipment additions as % of
revenue 15.3 % 23.5 %
- The increase in property and equipment
additions in absolute terms was driven primarily by the acquisition
of CWC and, to a lesser extent, increases in CPE and new build
activities across the legacy LiLAC footprint.
- We continue to expect the percentage of
revenue represented by our property and equipment additions to
range from 21% to 23% for the LiLAC Group in 2017
Consolidated Statements of Cash Flows - LiLAC Group
Three months ended March
31, 2017 2016 Variance in
millions
Net cash provided (used) by:
Operating Activities $ 75.9 $ 69.9 $ 6.0 Investing Activities $
(129.8 ) $ (55.5 ) $ (74.3 ) Financing Activities $ 28.9 $ (0.2 ) $
29.1
- Operating
Activities: the increase in cash provided was primarily
attributable to the net effect of (i) an increase in cash provided
by OCF and related working capital items, (ii) higher payments for
interest and taxes and (iii) higher cash payments related to
derivative instruments
- Investing
Activities: the increase in cash used was primarily due to
higher payments for capital expenditures
- Financing
Activities: the change in net cash provided (used) was
primarily attributable to higher net borrowings of debt, partially
offset by higher cash payments associated with the repurchase of
shares
- The inclusion of CWC in the 2017 period
accounted for the majority of these changes
Adjusted Free Cash Flow - LiLAC Group
Three months ended March 31,
2017 2016 in millions Adjusted
Free Cash Flow $ (58.0 ) $ 19.9
- The Q1 decrease, as compared to the
prior-year period, was attributable to:
- Higher cash provided from OCF and
related working capital items
- Higher interest payments (including
related derivative instruments)
- Higher capital expenditures
- Higher cash taxes
- The inclusion of CWC in the 2017 period
accounted for the majority of these increases
Leverage and Liquidity - LiLAC Group (at March 31,
2017)
- Total capital
leases and principal amount of third-party debt: $6.1
billion
- Leverage
ratios: consolidated gross and net leverage ratios24 of 4.3x
and 4.0x, respectively
- Average debt
tenor13: over 5.0 years, with less than 10% due prior to
2021
- Borrowing
costs14: blended fully-swapped borrowing cost of our
third-party debt was 6.6%
- Liquidity:
approximately $1.5 billion, including $527 million of cash and $1.0
billion of aggregate unused borrowing capacity25 under our credit
facilities
Forward-Looking Statements
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; our expectations with respect
to subscribers, revenue, OCF and Adjusted FCF; expectations with
respect to the development, enhancement and expansion of our
superior networks and innovative and advanced products and services
(including the impact of investments by Virgin Media in its
marketing efforts); plans and expectations relating to new build
and network extension opportunities; expectations regarding our
share buyback program; the strength of our balance sheet and tenor
of our third-party debt; statements regarding our joint venture in
the Netherlands; 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 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 effects of changes in laws or regulation; general
economic factors; our and our affiliates’ ability to obtain
regulatory approval and satisfy regulatory conditions associated
with acquisitions and dispositions; our and affiliates’ ability to
successfully acquire and integrate new businesses and realize
anticipated efficiencies from acquired businesses; the availability
of attractive programming for our and our affiliates’ video
services and the costs associated with such programming; our and
our affiliates’ ability to achieve forecasted financial and
operating targets; the outcome of any pending or threatened
litigation; the ability of our operating companies and affiliates
to access cash of their respective subsidiaries; the impact of our
operating companies' and affiliates’ future financial performance,
or market conditions generally, on the availability, terms and
deployment of capital; fluctuations in currency exchange and
interest rates; the ability of suppliers and vendors (including our
third-party wireless network providers under our MVNO arrangements)
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,
as amended, and Form 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 world’s largest international TV and
broadband company, with operations in more than 30 countries across
Europe, Latin America and the Caribbean. We invest in the
infrastructure that empowers our customers to make the most of the
digital revolution. Our scale and commitment to innovation enable
us to develop market-leading products delivered through
next-generation networks that connect our 25 million customers who
subscribe to over 50 million television, broadband internet and
telephony services. We also serve over 10 million mobile
subscribers and offer WiFi service across 6 million access
points.
Liberty Global’s businesses are comprised of two stocks: the
Liberty Global Group (NASDAQ: LBTYA, LBTYB and LBTYK) for our
European operations, and the LiLAC Group (NASDAQ: LILA and LILAK,
OTC Link: LILAB), which consists of our operations in Latin America
and the Caribbean.
The Liberty Global Group operates in 11 European countries under
the consumer brands Virgin Media, Unitymedia, Telenet and UPC. The
Liberty Global Group also owns 50% of VodafoneZiggo, a Dutch joint
venture, which has 4 million customers, 10 million fixed-line
subscribers and 5 million mobile subscribers. The LiLAC Group
operates in over 20 countries in Latin America and the Caribbean
under the consumer brands VTR, Flow, Liberty, Más Móvil and BTC. In
addition, the LiLAC Group operates a sub-sea fiber network
throughout the region in over 30 markets.
For more information, please visit www.libertyglobal.com
Footnotes
1 The Liberty Global ordinary shares 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
“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 on May 8, 2017 (the
"Form 10-Q"). While the LiLAC Group and the Liberty Global Group
have separate collections of businesses, assets and liabilities
attributed to them, neither group is a separate legal entity. The
LiLAC Group comprises our operations in Latin America and the
Caribbean and has attributed to it CWC, VTR and Liberty Puerto
Rico. The Liberty Global Group comprises our businesses, assets and
liabilities not attributed to the LiLAC Group, including Virgin
Media, Unitymedia, UPC Holding, Telenet and, through December 31,
2016, Ziggo Group Holding. The condensed consolidated financial
statements of Liberty Global are included in our Form 10-Q. For
attributed financial information of the Liberty Global Group and
the LiLAC Group, see Exhibit 99.1 to our Form 10-Q. 2 Our
next-generation video base consists of Horizon TV, TiVo (in the
U.K.), Digital TV with a Horizon-like user interface (Yelo in
Belgium) as well as Horizon-Lite set-top boxes. 3
Please see Footnotes for Operating Data
and Subscriber Variance Tables for the definition of RGUs. Organic
figures exclude RGUs of acquired entities at the date of
acquisition and other nonorganic adjustments, 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 As we no longer consolidate the Netherlands effective December
31, 2016, we have removed the Netherlands from certain information
presented for periods prior to December 31, 2016 to enhance
comparability. 5
Please see Revenue and Operating Cash Flow
for information on rebased growth.
6 Total B2B includes subscription (SOHO) and non-subscription
revenue. 7
Please see OCF Definition and
Reconciliation for our Operating Cash Flow ("OCF") definition and
the required reconciliations.
8 Average Revenue Per Unit (“ARPU”) refers to the average monthly
subscription revenue per average customer relationship or mobile
subscriber, as applicable, and is calculated by dividing the
average monthly cable subscription revenue (excluding mobile
services, B2B services, interconnect, channel carriage fees, mobile
handset sales, installation fees and revenue from the VodafoneZiggo
JV for services we provide to them) or mobile subscription revenue,
as applicable, for the indicated period, by the average of the
opening and closing balances for customer relationships or mobile
subscribers, as applicable, for the period. Customer relationships
of entities acquired during the period are normalized. Unless
otherwise indicated, ARPU per customer relationship or mobile
subscriber are not adjusted for currency impacts. ARPU per RGU
refers to average monthly subscription revenue per average RGU,
which is calculated by dividing the average monthly cable
subscription revenue for the indicated period, by the average of
the opening and closing balances of RGUs for the period. Unless
otherwise noted, ARPU in this release is considered to be ARPU per
average customer relationship or mobile subscriber, as applicable.
9 Please see Liberty Global's 8-K/A filed on March 28, 2017. 10 The
amounts presented for our 2017 new build programs in Europe, which
exclude upgrades, include homes, residential multiple dwelling
units and commercial premises that potentially could subscribe to
our residential or SOHO services. 11 On May 16, 2016, we acquired
Cable & Wireless Communications Limited ("CWC"). 12 A
reconciliation of our LiLAC OCF guidance for 2017 to a U.S. GAAP
measure is not provided due to the fact that not all elements of
the reconciliation is projected as part of our forecasting process,
as certain items may vary significantly from one period to another.
For example, impairments or other operating charges such as direct
acquisition costs are contingent upon the underlying activity,
which cannot be reasonably forecasted. FX rates as of February 12,
2017. 13 For purposes of calculating our average tenor, total
third-party debt excludes vendor financing. 14 Our blended
fully-swapped debt borrowing cost represents the weighted average
interest rate on our aggregate variable- and fixed-rate
indebtedness (excluding capital 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. 15 Liquidity
refers to cash and cash equivalents plus the maximum undrawn
commitments under subsidiary borrowing facilities, without regard
to covenant compliance calculations. 16
Please see Footnotes for Operating Data
and Subscriber Variance Tables for the definition of Customer
Relationships.
17
Please see Footnotes for Operating Data
and Subscriber Variance Tables for the definition of mobile
subscribers.
18 Our residential fixed business consists of our fixed-line
triple-play and DTH businesses, but excludes SOHO services.
Residential fixed also excludes the framework services revenue from
the VodafoneZiggo JV and our small Irish broadcasting businesses.
19
Please see Adjusted Free Cash Flow
Definition and Reconciliation for information on Adjusted Free Cash
Flow (“FCF”) and the required reconciliations. For more detailed
information concerning our operating, investing and financing cash
flows, see the condensed consolidated statements of cash flows
included in our Form 10-Q. A reconciliation of our 2017 FCF
guidance to a U.S. GAAP measure is not provided due to the fact
that not all elements of the reconciliation are projected as part
of our forecasting process, as certain items may vary significantly
from one period to another.
20 On February 11, 2016, Telenet acquired Telenet Group BVBA
("BASE"). 21 We offer our customers in the U.K., Belgium and
Switzerland the option to purchase a mobile handset pursuant to a
contract that is independent of a mobile airtime services contract
("split-contract programs"). Revenue associated with handsets sold
under our split-contract programs is recognized upfront and
included in other non-subscription revenue. We generally recognize
the full sales price for the mobile handset upon delivery,
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 our split-contract
programs, all revenue from handset sales that was contingent upon
delivering future airtime services was recognized over the life of
the customer contract as part of the monthly fee and included in
mobile subscription revenue. 22 OCF margin is calculated by
dividing OCF by total revenue for the applicable period. 23 Our
property and equipment additions include our capital expenditures
on an accrual basis and amounts financed under vendor financing or
capital lease arrangements. 24 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 or
secured by the shares we hold in ITV plc, Sumitomo Corporation and
Lions Gate Entertainment Corp. 25 Our aggregate unused borrowing
capacity of $4.0 billion represents the maximum undrawn commitments
under our subsidiaries' applicable facilities without regard to
covenant compliance calculations. This consists of $3.0 billion
attributed to the Liberty Global Group and $1.0 billion attributed
to the LiLAC Group. Upon completion of the relevant March 31, 2017
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 $3.9
billion. This consists of $3.0 billion attributed to the Liberty
Global Group and $879 million attributed to the LiLAC Group. LiLAC
cash of $527 million includes $288 million of cash held by CWC,
substantially all of which is held by CWC subsidiaries. For
information regarding limitations on CWC's ability to access this
cash, see the discussion under "Material Changes in Financial
Condition" in our Form 10-Q.
Balance Sheets, Statements of Operations and Statements of
Cash Flows
The consolidated balance sheets, statements of operations and
statements of cash flows of Liberty Global are 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 for the three months ended March 31,
2017, as compared to the corresponding prior-year periods. All of
our reportable segments derive their revenue primarily from
consumer and B2B services, including video, broadband internet and
fixed-line telephony services and, with the exception of Puerto
Rico, mobile services. For detailed information regarding the
composition of our reportable segments, see note 15 to the
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 2016, we have
adjusted our historical revenue and OCF for the three months ended
March 31, 2016 to (i) include the pre-acquisition revenue and OCF
of certain entities acquired during 2016 and 2017 in our rebased
amounts for the three months ended March 31, 2016 to the same
extent that the revenue and OCF of such entities are included in
our results for the three months ended March 31, 2017, (ii) exclude
the revenue and OCF of Ziggo Group Holding and a sports channel
that were contributed to the VodafoneZiggo JV at the end of
December 31, 2016, (iii) include revenue for the framework services
agreement with the VodafoneZiggo JV in our rebased amounts for the
three months ended March 31, 2016 as if the framework services
agreement had been in place at the beginning of 2016, (iv) exclude
the revenue and OCF of multi-channel multi-point (microwave)
distribution system subscribers in Ireland that have disconnected
since we announced the switch-off of this service effective April
2016 for the three months ended March 31, 2016 to the same extent
that the revenue and OCF of these subscribers is excluded from our
results for the three months ended March 31, 2017 (v) exclude the
revenue and OCF of two small disposals made in Belgium during Q1
2017 to the same extent that the revenue and OCF of these disposed
businesses is excluded from our results for the three months ended
March 31, 2017 and (vi) reflect the translation of our rebased
amounts for the three months ended March 31, 2016 at the applicable
average foreign currency exchange rates that were used to translate
our results for the three months ended March 31, 2017. We have
included CWC, BASE and four small entities in whole or in part in
the determination of our rebased revenue and OCF for the three
months ended March 31, 2016. We have reflected the revenue and OCF
of the acquired entities in our 2016 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 (“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 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.
The following table provides adjustments made to the 2016
amounts to derive our rebased growth rates for the Liberty Global
Group and the LiLAC Group:
Revenue OCF Three
months ended Three months ended March 31,
2016 March 31, 2016 Liberty Global Group in
millions Acquisitions $ 120.2 $ 39.4 Contribution of Ziggo
Group Holding to the VodafoneZiggo JV and other dispositions (a)
(680.2 ) (370.6 ) Foreign Currency (276.5 ) (120.3 ) Total decrease
$ (836.5 ) $ (451.5 )
LiLAC Group CWC $ 605.6 $ 267.2
Foreign Currency 8.3 2.5 Total increase $ 613.9
$ 269.7 (a) In connection with the
December 31, 2016 closing of the VodafoneZiggo JV transaction, we
entered into a Framework Agreement that provides for the terms
under which we provide services to the VodafoneZiggo JV. These
adjustments to revenue and OCF are net of $31 million of revenue
that we assumed would have been earned if the Framework Agreement
had been in place on January 1, 2016.
OCF 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 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 U.S. GAAP measures of income or cash
flows. A reconciliation of our operating income to total
segment OCF is presented in the following table:
Three months ended March 31,
2017 2016 in millions
Consolidated Liberty Global Operating income $ 569.2 $ 586.6
Share-based compensation expense 39.0 69.0 Depreciation and
amortization 1,322.2 1,435.5 Impairment, restructuring and other
operating items, net 28.2 24.4 Total segment OCF $
1,958.6 $ 2,115.5
Liberty Global Group
Operating income $ 431.2 $ 526.6 Share-based compensation expense
33.4 67.2 Inter-group fees and allocations (3.0 ) (2.1 )
Depreciation and amortization 1,128.3 1,383.2 Impairment,
restructuring and other operating items, net 14.8 18.7
Total segment OCF $ 1,604.7 $ 1,993.6
LiLAC Group Operating income $ 138.0 $ 60.0 Share-based
compensation expense 5.6 1.8 Inter-group fees and allocations 3.0
2.1 Depreciation and amortization 193.9 52.3 Impairment,
restructuring and other operating items, net 13.4 5.7
Total segment OCF $ 353.9 $ 121.9
Summary of Debt, Capital Lease Obligations and Cash and Cash
Equivalents
The following table1 details the U.S. dollar equivalent balances
of the outstanding principal amount of our debt, capital lease
obligations and cash and cash equivalents at March 31, 2017:
Capital Debt
& Capital Cash Lease
Lease and Cash Debt2 Obligations
Obligations Equivalents in millions Liberty
Global and Liberty Global Group unrestricted subsidiaries $ 2,269.8
$ 66.7 $ 2,336.5 $ 1,955.3 Virgin Media3 15,220.1 84.1 15,304.2
60.6 UPC Holding 6,908.5 41.1 6,949.6 15.6 Unitymedia 8,132.8 661.6
8,794.4 1.9 Telenet 4,746.5 387.1 5,133.6 76.2
Total Liberty Global Group 37,277.7 1,240.6 38,518.3
2,109.6 LiLAC Group unrestricted subsidiaries — — — 93.8 CWC
3,670.9 20.0 3,690.9 288.4 VTR Finance 1,455.8 0.6 1,456.4 98.9
Liberty Puerto Rico 942.5 0.1 942.6 46.0 Total
LiLAC Group 6,069.2 20.7 6,089.9 527.1 Total $
43,346.9 $ 1,261.3 $ 44,608.2 $ 2,636.7
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 reconcile those additions
to the capital expenditures that are presented in the attributed
statement of cash flows information included in Exhibit 99.1 to our
10-Q.
Liberty Global Group
Three months ended March 31,
2017 2016
in millions, except
%amounts
Customer premises equipment $ 296.0 $ 236.2 New Build & Upgrade
189.8 151.0 Capacity 116.6 106.3 Baseline 156.3 174.5 Product &
Enablers 125.7 117.4 Property and equipment additions
(excluding the Netherlands) 884.4 785.4 The Netherlands —
140.1 Total property and equipment additions 884.4 925.5
Reconciliation of property and equipment additions to capital
expenditures: Excluding the Netherlands: Assets acquired under
capital-related vendor financing arrangements4 (614.4 ) (398.5 )
Assets acquired under capital leases (31.4 ) (27.9 ) Changes in
current liabilities related to capital expenditures 261.8 110.4 The
Netherlands — (22.4 ) Total capital expenditures5 $ 500.4
$ 587.1 Property and equipment additions as %
of revenue (excluding the Netherlands) 25.1 % 21.7 %
LiLAC Group
Three months ended March 31,
2017 2016
in millions, except
%amounts
Customer premises equipment $ 45.4 $ 38.6 New Build & Upgrade
14.6 13.8 Capacity 9.4 7.6 Baseline 7.6 5.0 Product & Enablers
1.7 6.5 CWC P&E Additions 60.5 — Property and
equipment additions 139.2 71.5 Assets acquired under
capital-related vendor financing arrangements (14.1 ) — Assets
acquired under capital leases (0.9 ) — Changes in current
liabilities and cash derivatives related to capital expenditures
0.2 (21.5 ) Capital expenditures $ 124.4 $ 50.0
Property and equipment additions as % of revenue 15.3
% 23.5 % ______________________________ 1 Except as
otherwise indicated, the amounts reported in the table include the
named entity and its subsidiaries. 2 Debt amounts for UPC Holding
and Telenet include notes issued by special purpose entities that
are consolidated by the respective subsidiary. 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 $0.3 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. 4 Amounts exclude related VAT of $98
million and $56 million during the three months ended March 31,
2017 and 2016, respectively, that were also financed by our vendors
under these arrangements. 5 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.
Adjusted Free Cash Flow Definition and Reconciliation
We define Adjusted Free Cash Flow as net cash provided by our
operating activities, plus (i) cash payments for third-party costs
directly associated with successful and unsuccessful acquisitions
and dispositions and (ii) expenses financed by an intermediary,
less (a) capital expenditures, as reported in our 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 Adjusted 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. Adjusted Free Cash Flow should not be understood to
represent our ability to fund discretionary amounts, as we have
various mandatory and contractual obligations, including debt
repayments, which are not deducted to arrive at this amount.
Investors should view Adjusted Free Cash Flow as a supplement to,
and not a substitute for, U.S. GAAP measures of liquidity included
in our consolidated statements of cash flows. We changed our
definition of adjusted free cash flow effective January 1, 2017 to
remove the add-back of excess tax benefits from share-based
compensation. This change, which was given effect for all periods
presented, was made to accommodate our January 1, 2017 adoption of
ASU 2016-09, Compensation - Stock Compensation, Improvements to
Employee Share-Based Payment Accounting, pursuant to which we
retrospectively revised the presentation of our condensed
consolidated statements of cash flows to remove the operating cash
outflows and financing cash inflows associated with excess tax
benefits from share-based compensation. The following table
provides the reconciliation of our net cash provided by operating
activities to Adjusted Free Cash Flow for the indicated
periods:
Three months ended March 31,
2017 2016 in millions
Consolidated Liberty Global Net cash provided by operating
activities $ 978.7 $ 1,090.7 Cash payments for direct acquisition
and disposition costs 2.7 8.2 Expenses financed by an intermediary6
308.1 153.5 Capital expenditures (624.8 ) (637.1 ) Principal
payments on amounts financed by vendors and intermediaries (1,033.0
) (672.9 ) Principal payments on certain capital leases (22.3 )
(27.4 ) Adjusted FCF $ (390.6 ) $ (85.0 )
Liberty Global
Group Net cash provided by operating activities $ 902.8 $
1,020.8 Cash payments for direct acquisition and disposition costs
1.8 8.1 Expenses financed by an intermediary 297.8 153.5 Capital
expenditures (500.4 ) (587.1 ) Principal payments on amounts
financed by vendors and intermediaries (1,014.2 ) (672.9 )
Principal payments on certain capital leases (20.4 ) (27.3 )
Adjusted FCF $ (332.6 ) $ (104.9 )
LiLAC Group Net
cash provided by operating activities $ 75.9 $ 69.9 Cash payments
for direct acquisition and disposition costs 0.9 0.1 Expenses
financed by an intermediary 10.3 — Capital expenditures (124.4 )
(50.0 ) Principal payments on amounts financed by vendors and
intermediaries (18.8 ) — Principal payments on certain capital
leases (1.9 ) (0.1 ) Adjusted FCF $ (58.0 ) $ 19.9
________________________________ 6 For purposes of
our 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 consolidated statements of cash
flows. For purposes of our Adjusted Free Cash Flow definition, we
add back the hypothetical operating cash outflow when these
financed expenses are incurred and deduct the financing cash
outflows when we pay the financing intermediary.
ARPU per Customer Relationship7
The following table provides ARPU per customer relationship for
the indicated periods:
Three months ended March 31,
% FX-Neutral8 2017
2016 Change % Change Liberty
Global Consolidated $ 40.71 $ 43.74 (6.9 %) (1.4 %) Liberty Global
Group € 37.19 € 39.04 (4.7 %) (1.6 %) U.K. & Ireland (Virgin
Media) £ 49.99 £ 49.20 1.6 % 0.8 % Germany (Unitymedia) € 24.82
€ 23.87 4.0 % 4.0 % Belgium (Telenet) € 54.37 € 52.34 3.9 % 3.9 %
The Netherlands (Ziggo Group Holding) € — € 44.88
*
*
Other Europe (UPC Holding) € 26.98 € 26.67 1.2 % (0.2 %) LiLAC
Group9 $ 48.99 $ 54.36 (9.9 %) (13.9 %) Chile (VTR) CLP 33,676 CLP
33,049 1.9 % 1.9 % CWC $ 35.70 $ —
*
*
Puerto Rico $ 79.07 $ 77.40 2.2 % 2.2 %
* - Omitted
____________________________ 7 The impact of CWC is
not included in the three months ended March 31, 2016. 8 The
FX-neutral change represents the percentage change on a
year-over-year basis adjusted for FX impacts and is calculated by
adjusting the prior-year figures to reflect translation at the
foreign currency rates used to translate the current year amounts.
9 The decrease in the LiLAC Group ARPU is primarily due to the
inclusion of CWC. Excluding CWC, the LiLAC Group ARPU was $57.82
for the three months ended March 31, 2017.
Mobile ARPU
The following tables provide ARPU per mobile subscriber10 for
the indicated periods:
ARPU per Mobile Subscriber Three months
ended March 31, %
FX-Neutral 2017 2016
Change % Change Liberty Global Group: Including
interconnect revenue $ 17.44 $ 19.88 (12.3 %) (5.2 %) Excluding
interconnect revenue $ 14.16 $ 16.23 (12.8 %) (5.3 %) LiLAC
Group: Including interconnect revenue $ 16.81 $ 24.77 (32.1 %)
(36.6 %) Excluding interconnect revenue $ 15.67 $ 22.40 (30.0 %)
(34.7 %) _______________________________ 10 Our ARPU
per mobile subscriber calculation that excludes interconnect
revenue refers to the average monthly mobile subscription revenue
per average mobile subscriber 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. The amounts for the
three months ended March 31, 2016 do not include the impact of CWC.
The decrease in ARPU per mobile subscriber for the Liberty Global
Group is largely due to our split-contract programs. The decrease
in ARPU per mobile subscriber for the LiLAC Group is primarily due
to the inclusion of CWC. Excluding CWC, the LiLAC Group ARPU per
mobile subscriber for the three months ended March 31, 2017 was
$26.66 (including interconnect) and $24.41 (excluding
interconnect).
RGUs, Customers and Bundling11
The following table provides information on the breakdown of our
RGUs and customer base and highlights our customer bundling metrics
at March 31, 2017, December 31, 2016, and March 31,
2016:
March 31, December 31,
March 31, Q1’17 / Q4’16
Q1’17 / Q1’16 2017 2016
2016 (% Change) (% Change)
Liberty Global
Group
Total RGUs Video RGUs 18,472,500 18,483,800 22,580,300 (0.1
%) (18.2 %) Broadband Internet RGUs 14,486,300 14,334,600
16,945,500 1.1 % (14.5 %) Telephony RGUs 12,065,900
11,962,900 14,118,400 0.9 % (14.5 %) Total Liberty
Global Group 45,024,700 44,781,300 53,644,200 0.5 % (16.1 %)
Customers Single-Play Customers 8,330,700 8,417,300
9,551,100 (1.0 %) (12.8 %) Dual-Play Customers 3,925,700 3,889,900
4,415,200 0.9 % (11.1 %) Triple-Play Customers 9,614,200
9,528,100 11,754,200 0.9 % (18.2 %) Total Liberty
Global Group 21,870,600 21,835,300 25,720,500 0.2 % (15.0 %)
Bundling % of Single-Play Customers 38.1 % 38.6 % 37.1 %
(1.3 %) 2.7 % % of Dual-Play Customers 17.9 % 17.8 % 17.2 % 0.6 %
4.1 % % of Triple-Play Customers 44.0 % 43.6 % 45.7 % 0.9 % (3.7 %)
RGUs per customer relationship 2.06 2.05 2.09 0.5 % (1.4 %)
LiLAC
Group
Total RGUs Video RGUs 1,717,100 1,714,300 1,293,400 0.2 %
32.8 % Broadband Internet RGUs 2,061,500 2,022,900 1,347,600 1.9 %
53.0 % Telephony RGUs 1,639,300 1,641,200 876,200
(0.1 %) 87.1 % Total LiLAC Group 5,417,900 5,378,400
3,517,200 0.7 % 54.0 %
Customers Single-Play
Customers 1,271,800 1,249,000 570,000 1.8 % 123.1 % Dual-Play
Customers 801,200 793,900 382,200 0.9 % 109.6 % Triple-Play
Customers 847,900 847,200 727,600 0.1 % 16.5 %
Total LiLAC Group 2,920,900 2,890,100 1,679,800 1.1 % 73.9 %
Bundling
% of Single-Play Customers 43.6 % 43.2 % 33.9 % 0.9 % 28.6 % % of
Dual-Play Customers 27.4 % 27.5 % 22.8 % (0.4 %) 20.2 % % of
Triple-play Customers 29.0 % 29.3 % 43.3 % (1.0 %) (33.0 %)
RGUs per customer relationship 1.85 1.86 2.09 (0.5 %) (11.5 %)
_____________________________ 11 The March 31, 2016
figures for the LiLAC Group do not include the impact of the CWC
acquisition and the December 31, 2016 and March 31, 2017 figures
for the Liberty Global Group do not include Ziggo Group Holding,
which was contributed to the VodafoneZiggo JV on December 31, 2016.
Consolidated Operating Data — March 31,
2017
Video
HomesPassed(1)
Two-wayHomesPassed(2)
Fixed-lineCustomerRelationships(3)
Basic
VideoSubscribers(5)
EnhancedVideoSubscribers(6)
DTHSubscribers(7)
TotalVideo
InternetSubscribers(8)
TelephonySubscribers(9)
TotalRGUs(4)
Total MobileSubscribers
U.K.(11) 13,554,400 13,542,200 5,351,500 — 3,775,300 —
3,775,300 4,997,400 4,425,700 13,198,400 3,015,700 Germany
12,916,200 12,807,400 7,173,500 4,797,800 1,599,500 — 6,397,300
3,357,100 3,137,000 12,891,400 346,700 Belgium 2,996,700 2,996,700
2,134,200 268,700 1,727,600 — 1,996,300 1,608,100 1,258,200
4,862,600 2,837,500 Switzerland(10) 2,251,100 2,251,100 1,281,400
569,000 672,200 — 1,241,200 744,500 517,900 2,503,600 85,300
Austria 1,394,500 1,394,500 653,200 109,600 367,600 — 477,200
505,900 434,700 1,417,800 39,000 Ireland 856,300
812,100 452,500
28,400 269,500 —
297,900 364,400
353,900 1,016,200 27,900 Total
Western Europe 33,969,200 33,804,000
17,046,300 5,773,500
8,411,700 —
14,185,200 11,577,400
10,127,400 35,890,000 6,352,100 Poland
3,184,100 3,123,600 1,430,500 203,400 1,010,500 — 1,213,900
1,111,500 630,200 2,955,600 4,900 Romania 2,922,500 2,877,000
1,290,900 255,000 647,400 356,400 1,258,800 544,000 488,300
2,291,100 — Hungary 1,738,100 1,720,600 1,107,000 118,400 545,600
284,800 948,800 641,600 589,800 2,180,200 67,100 Czech Republic
1,484,000 1,450,700 717,000 152,900 355,200 109,100 617,200 481,500
146,900 1,245,600 — Slovakia 588,700 566,800
278,900 27,100
144,900 76,600
248,600 130,300
83,300 462,200 — Total CEE 9,917,400
9,738,700 4,824,300
756,800 2,703,600
826,900 4,287,300
2,908,900 1,938,500
9,134,700 72,000
Total Liberty Global Group
43,886,600 43,542,700
21,870,600
6,530,300 11,115,300
826,900 18,472,500
14,486,300
12,065,900 45,024,700
6,424,100 Chile 3,271,500 2,758,600 1,352,800 75,700
977,200 — 1,052,900 1,117,800 650,200 2,820,900 178,700 Puerto Rico
1,095,000 1,095,000 406,700 — 260,900 — 260,900 333,900 210,900
805,700 — Panama 527,800 453,200 343,300 — 42,500 42,500 85,000
97,700 275,900 458,600 1,783,200 Jamaica 424,300 414,300 294,900 —
98,000 — 98,000 174,400 223,800 496,200 934,900 Trinidad 311,700
311,700 163,400 — 114,100 — 114,100 123,500 33,400 271,000 —
Barbados 122,500 122,500 89,500 — 18,100 — 18,100 63,000 79,500
160,600 128,600 Bahamas 128,900 128,900 54,700 — 3,700 — 3,700
26,800 54,700 85,200 309,400 Other CWC 356,300
336,500 215,600 12,000
72,400 —
84,400 124,400
110,900 319,700 397,300
Total LiLAC
Group 6,238,000 5,620,700
2,920,900
87,700 1,586,900
42,500 1,717,100
2,061,500
1,639,300 5,417,900
3,732,100 Grand Total 50,124,600
49,163,400
24,791,500 6,618,000
12,702,200 869,400
20,189,600
16,547,800 13,705,200
50,442,600 10,156,200
Subscriber Variance Table - March 31,
2017 vs December 31, 2016
Video
HomesPassed(1)
Two-wayHomesPassed(2)
Fixed-lineCustomerRelationships(3)
Basic
VideoSubscribers(5)
EnhancedVideoSubscribers(6)
DTHSubscribers(7)
TotalVideo
InternetSubscribers(8)
TelephonySubscribers(9)
TotalRGUs(4)
Total MobileSubscribers
U.K.(11) 95,200 95,800 67,500 — 46,200 — 46,200 80,700
35,600 162,500 (6,600 ) Germany 21,700 40,300 11,300 (25,100 )
16,700 — (8,400 ) 31,500 29,300 52,400 (6,400 ) Belgium 9,100 9,100
(15,100 ) (15,900 ) (5,300 ) — (21,200 ) 6,400 2,800 (12,000 )
(154,400 ) Switzerland(10) 14,300 14,300 (13,300 ) (7,500 ) (3,000
) — (10,500 ) (5,300 ) 6,000 (9,800 ) 5,000 Austria 3,100 3,100
(800 ) (6,100 ) 300 — (5,800 ) 3,100 9,200 6,500 8,500 Ireland
4,000 4,600 (2,200 )
(1,300 ) (5,600 ) —
(6,900 ) 900
1,500 (4,500 ) 10,000 Total
Western Europe 147,400 167,200
47,400 (55,900 ) 49,300
— (6,600 )
117,300 84,400 195,100
(143,900 ) Poland 26,500 28,700 (8,700 ) (6,200 ) 5,600 —
(600 ) 6,400 (4,300 ) 1,500 (400 ) Romania 34,800 38,600 (5,100 )
(8,400 ) 7,000 (7,100 ) (8,500 ) 8,600 17,400 17,500 — Hungary
6,700 6,700 (5,700 ) (12,800 ) 13,400 (7,200 ) (6,600 ) 9,500
10,000 12,900 4,600 Czech Republic 4,000 4,000 3,000 9,500 400
(2,400 ) 7,500 7,600 (2,500 ) 12,600 — Slovakia 900
2,000 4,400 (1,400
) 1,100 3,800
3,500 2,300 (2,000
) 3,800 — Total CEE 72,900
80,000 (12,100 )
(19,300 ) 27,500 (12,900 )
(4,700 ) 34,400
18,600 48,300 4,200 Total
Liberty Global Group 220,300 247,200
35,300 (75,200 )
76,800 (12,900 ) (11,300 )
151,700 103,000
243,400 (139,700 ) Chile 54,900 48,100 23,900
(3,800 ) 9,400 — 5,600 26,600 (6,800 ) 25,400 12,500 Puerto Rico
2,700 2,700 3,000 — (400 ) — (400 ) 4,900 2,100 6,600 — Panama —
36,900 7,300 — (300 ) 2,800 2,500 2,000 700 5,200 46,900 Jamaica —
(10,000 ) (1,000 ) — (4,500 ) — (4,500 ) 2,100 2,600 200 (9,900 )
Trinidad 1,200 1,200 (3,000 ) — (3,100 ) — (3,100 ) — 2,700 (400 )
— Barbados 700 700 (2,700 ) — (300 ) — (300 ) 500 (2,100 ) (1,900 )
(2,900 ) Bahamas (26,100 ) (26,100 ) (500 ) — 2,100 — 2,100 400
(400 ) 2,100 (5,800 ) Other 2,000 2,000
3,800 1,900
(1,000 ) — 900
2,100 (700 ) 2,300
(1,700 ) Total LiLAC Group 35,400 55,500
30,800 (1,900 )
1,900 2,800 2,800
38,600 (1,900 )
39,500 39,100
Grand Total
255,700 302,700
66,100 (77,100 )
78,700 (10,100
) (8,500 )
190,300 101,100
282,900 (100,600 )
Subscriber Variance Table - March 31,
2017 vs December 31, 2016
Video
Homes Passed(1)
Two-wayHomes
Passed(2)
Fixed-lineCustomer
Relationships(3)
Basic Video
Subscribers(5)
Enhanced Video
Subscribers(6)
DTH
Subscribers(7)
TotalVideo
Internet
Subscribers(8)
Telephony
Subscribers(9)
Total RGUs(4)
Total Mobile
Subscribers(12)
Organic Change
Summary:
U.K. 95,200 95,800 67,500 — 46,200 — 46,200 80,700 35,600 162,500
(6,600 ) Germany 21,700 52,200 11,300 (25,100 ) 16,700 — (8,400 )
31,500 29,300 52,400 (6,400 ) Belgium 9,100 9,100 (15,100 ) (15,900
) (5,300 ) — (21,200 ) 6,400 2,800 (12,000 ) 3,500 Other Europe
85,600 93,300 (23,500 )
(41,100 ) 22,300
(12,900 ) (31,700 ) 35,800
37,300 41,400 27,700
Total Liberty Global Group 211,600
250,400 40,200
(82,100 )
79,900 (12,900 )
(15,100 ) 154,400
105,000 244,300
18,200 Chile 54,900 48,100 23,900 (3,800 )
9,400 — 5,600 26,600 (6,800 ) 25,400 12,500 Puerto Rico 2,700 2,700
3,000 — (400 ) — (400 ) 4,900 2,100 6,600 — Panama — 36,900 9,700 —
2,100 2,800 4,900 2,000 700 7,600 46,900 Jamaica — — (1,000 ) —
(4,500 ) — (4,500 ) 2,100 2,600 200 (9,900 ) Trinidad 1,200 1,200
(3,000 ) — (3,100 ) — (3,100 ) — 2,700 (400 ) — Barbados 700 700
(2,700 ) — (300 ) — (300 ) 500 (2,100 ) (1,900 ) (2,900 ) Bahamas —
— (500 ) — 2,100 — 2,100 400 (400 ) 2,100 (5,800 ) Other 2,000
2,000 3,800
1,900 (1,000 ) —
900 2,100
(700 ) 2,300 (1,700 )
Total LiLAC Group
61,500 91,600
33,200 (1,900 )
4,300 2,800
5,200 38,600
(1,900 )
41,900 39,100 Total Organic Change
273,100 342,000 73,400
(84,000 ) 84,200
(10,100 ) (9,900 ) 193,000
103,100 286,200
57,300
Q1 2017
Adjustments:
Q1 2017 Germany adjustments — (11,900 ) — — — — — — — — — Q1 2017
Acquisitions - Switzerland 8,700 8,700 4,800 4,800 — — 4,800 — —
4,800 — Q1 2017 Switzerland adjustments — — — 2,100 — — 2,100 — —
2,100 — Q1 2017 Disposition - Switzerland — — (3,900 ) — (3,100 ) —
(3,100 ) (2,700 ) (2,000 ) (7,800 ) — Q1 2017 Poland adjustments —
— (5,800 ) — — — — — — — — Q1 2017 Disposition - Belgium — — — — —
— — — — — (157,900 ) Q1 2017 Jamaica adjustments — (10,000 ) — — —
— — — — — — Q1 2017 Bahamas adjustments (26,100 ) (26,100 ) — — — —
— — — — — Q1 2017 Panama adjustments — —
(2,400 ) —
(2,400 ) — (2,400 )
— — (2,400 ) —
Net Adjustments (17,400 ) (39,300 )
(7,300 ) 6,900
(5,500 ) — 1,400
(2,700 ) (2,000 ) (3,300 )
(157,900 )
Net Adds (Reductions) 255,700
302,700 66,100
(77,100 ) 78,700 (10,100 )
(8,500 ) 190,300
101,100 282,900 (100,600 )
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 homes. 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. We do not count homes passed for
DTH. Due to the fact that we do not own the partner networks
(defined below) used in Switzerland (see note 10) we do not report
homes passed for Switzerland’s 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 Fixed-line 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 RGU is separately a Basic Video
Subscriber, Enhanced Video Subscriber, DTH Subscriber, Internet
Subscriber or Telephony Subscriber (each as defined and described
below). A home, residential multiple dwelling unit, or commercial
unit may contain one or more RGUs. For example, if a residential
customer in our Austrian market subscribed to our enhanced video
service, fixed-line telephony service and broadband internet
service, the customer would constitute three RGUs. Total RGUs is
the sum of Basic Video, Enhanced Video, DTH, 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 March
31, 2017 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 173,900
“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 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 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 43,500
and 19,900 digital subscriber line (“DSL”) subscribers within
Austria and Belgium, respectively, who 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 93,400 subscribers who have
requested and received this service. 9 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 33,100
subscribers within Austria 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 101,600
subscribers who have requested and received this service. 10
Pursuant to service agreements, Switzerland offers 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 March 31, 2017, Switzerland’s partner
networks account for 133,700 Customer Relationships, 287,200 RGUs,
104,000 Enhanced Video Subscribers, 107,000 Internet Subscribers,
and 76,200 Telephony Subscribers. 11 Our Homes Passed and Two-way
Homes Passed counts for the U.K. as of December 31, 2016 have been
reduced by 151,000 premises as further detailed in our Form 8-K/A
filed on March 28, 2017. 12 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. In a number of countries,
our mobile subscribers receive mobile services pursuant to prepaid
contracts. As of March 31, 2017, the prepaid mobile subscriber
count included the following: Panama (1,615,400), Jamaica
(911,900), Belgium (683,400), U.K. (605,100), Bahamas (277,900),
Barbados (99,300), Chile (7,700) and twelve remaining CWC
geographies (338,800).
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.” 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. SOHO customers of CWC are not included in our respective
RGU and customer counts as of March 31, 2017. 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,
including CWC, 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/20170507005042/en/
Liberty Global plcInvestor
Relations:Oskar Nooij, +1 303 220 4218orChristian
Fangmann, +49 221 84 62 5151orJohn Rea, +1 303 220
4238orCorporate
Communications:Matt Beake, +44 20 8483 6428orRebecca
Pike, +44 20 8483 6216
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