Subscriber Additions Doubled to 156,000 versus Prior
Year
Rebased Revenue and OCF Growth of 3%, Ramping in H2
Shareholder Approval Received for Cable & Wireless
Acquisition
Q1 Equity Repurchases of $286 Million; Buybacks Resuming
Soon
All Full-Year 2016 Guidance Targets Confirmed for LBTY and
LILAC
Liberty Global plc ("Liberty Global") (NASDAQ: LBTYA, LBTYB,
LBTYK, LILA and LILAK), today announces financial and operating
results for the three months ended March 31, 2016 ("Q1") for the
Liberty Global Group1 and the LiLAC Group1.
Key highlights for the consolidated operations of Liberty
Global plc in Q1 2016
- RGU2 additions more than doubled
year-over-year to 156,000 in Q1 2016
- Broadband, video and fixed-line
telephony results all improved year-over-year
- Price increases implemented
successfully, providing foundation for 2016 growth
- New build programs on track to deliver
1.5 million additional homes in 2016
- Revenue of $4.6 billion, reflecting
overall rebased3 growth of 3%
- 8% rebased growth in Chile, 5% rebased
growth in Germany and Belgium
- Rebased OCF4 growth of 3%, reaching
$2.1 billion, consistent with expected phasing
- Operating income of $587 million, a 5%
increase year-over-year
- Negative Free Cash Flow ("FCF")5 of $85
million, mainly due to timing of payments
- Confirming guidance to deliver over $2
billion6 of FCF for full-year 2016
- Repurchased $286 million of equity in
Q1 2016, impacted by limitations from the CWC deal
- Moratorium on buyback program to end
following transaction closure
Operating and financial highlights for Liberty Global Group,
our European business
- Q1 2016 RGU additions of 135,000, with
strongest Q1 U.K. result in six years
- Performance driven by higher
broadband/voice additions and lower video attrition
- Delivered 99,000 organic postpaid
mobile subscriber additions in Q1 2016
- Integration of BASE mobile business in
Belgium underway
- Continued traction of next-generation7
video with Horizon TV base surpassing 2 million
- Added nearly 200,000 Horizon TV
subscribers in Q1 2016, including 100,000 at Ziggo
- Q1 rebased revenue and OCF growth of 3%
for our European operations
- Switzerland/Austria (8%), Germany (6%)
and U.K./Ireland (4%) key OCF contributors
- Operating income increased 4%
year-over-year to $527 million
- Balance sheet remains in great shape,
with extended maturities and currencies hedged
- Net leverage8 of 5.3x, blended cost of
debt9 4.7% and average tenor of seven years
- $3.9 billion of total liquidity10 and
only 12% of debt due before 2021
Operating and financial highlights for LiLAC Group
- Q1 2016 RGU additions of 21,000 driven
by continued broadband demand
- Organic customer11 additions of 16,000,
our best quarterly result in three years
- Video results in Chile fueled by the
continued success of “Vive Más” bundles
- Brand harmonization completed and
Choice integration proceeding in Puerto Rico
- LiLAC delivered robust financial
results in Q1
- Rebased revenue growth of 6% overall,
including 8% at VTR
- Rebased OCF growth of 11% to $122
million
- Operating income of $60 million in Q1
2016, a 15% increase year-over-year
- FCF of $20 million, an improvement from
the $26 million deficit in Q1 2015
- Net leverage of 4.3x at March 31, 2016,
with minimal debt maturities prior to 2022
CEO Mike Fries stated, "We exceeded our own expectations for the
first quarter with more than 150,000 new RGUs, a sharp increase
from last year, as we demonstrated improved momentum across all
products. At the same time, we successfully landed price increases
across markets, laying the foundation for faster growth during the
remainder of the year. The standout performer this quarter was
Virgin Media in the U.K., where record low churn12 and new build
investments contributed to our best Q1 result since 2010.”
“Our innovation pipeline remains full, with a clear focus on
further enhancing the customer experience. We are constantly
improving our video products with great new functionality such as
Horizon Go and Replay TV, along with additional HD content, while
the new Connect Box provides our broadband customers with superior
in-home connectivity, supporting speeds of up to 1 Gbps. These
improving consumer value propositions, together with ongoing new
build activities across our footprint, are expected to drive higher
quarterly RGU additions during the balance of 2016.”
“Our B2B business, another key driver of future growth,
delivered strong results in Q1, with 10% rebased revenue growth.
Wireless highlights for the quarter include 100,000 organic
postpaid mobile subscriber additions, as well as Telenet’s
completion of the BASE acquisition. That integration is already
well underway and we have identified an incremental €70 million of
annual efficiencies, bringing the total synergy target13 to €220
million. We also remain in constructive dialogue with the European
Commission regarding the combination of Ziggo’s fiber-rich
broadband network with Vodafone’s leading 4G mobile network in the
Netherlands. This highly complementary joint venture will create a
strong national competitor and we expect the transaction to close
around the end of 2016.”
"In terms of our financial results, Liberty Global Group
reported 3% rebased growth for both revenue and OCF in Europe for
Q1, which was in-line with our expectations. Looking ahead, we
expect our OCF growth to improve throughout the year and are
therefore confirming our guidance of 5% to 7% rebased growth in
Europe, excluding Ziggo and BASE, for full-year 2016. We are also
confirming our Free Cash Flow guidance for at least $2 billion this
year, as our FCF results are typically weighted to the second half
of the year.”
"Our LiLAC business in Latin America and the Caribbean is
thriving on all fronts - operationally, financially and
strategically. We had an excellent start to the year with continued
subscriber gains, fueled once again by our market-leading broadband
speeds, as well as solid ARPU growth. These results helped drive
rebased top-line and OCF growth of 6% and 11%, respectively, and we
are confirming all of our LiLAC guidance targets for full-year
2016.”
“On the strategic front, we received shareholder approval for
the Cable & Wireless transaction in April. This acquisition
will significantly enhance our scale and management depth, allow us
to unlock the substantial growth potential of the combined
businesses and pursue new consolidation opportunities that will
drive long-term equity value for our shareholders. We are currently
evaluating the merits of distributing the 67% inter-group interest
in LiLAC to Liberty Global Group shareholders, which would result
in 100% of the LiLAC tracking stock being directly held by
shareholders. A final decision has not been made, but we intend to
communicate something definitive soon.”
"Turning to our balance sheet, we have long-dated debt
maturities with an average tenor of more than seven years, and we
continue to enjoy borrowing costs below 5% along with substantial
liquidity. We repurchased $286 million of equity in Q1, which was
impacted by restrictions due to the pending Cable & Wireless
transaction. The recent moratorium on share buybacks will be lifted
next week and, as such, we plan to materially increase our
repurchase activity in the weeks and months ahead. Our current
valuation is attractive, and we look forward to buying an
additional $3.7 billion of our shares between now and year-end
2017.”
Subscriber Statistics - Liberty Global Group (Europe)
At March 31, 2016, we provided a total of 53.6 million
subscription services ("RGUs") to our 25.7 million unique customers
across our European footprint totaling 49.5 million homes passed14.
These service subscriptions consisted of 22.6 million video, 16.9
million broadband internet and 14.1 million telephony RGUs. During
Q1 2016, we increased our total RGU base by 135,000 organic
additions, an increase of over 100,000 RGUs year-over-year, with
improvements across all three products. We ended the quarter with a
bundling ratio of 2.1 RGUs per customer, as 11.8 million (46%) of
our customers subscribed to triple-play, 4.4 million (17%)
subscribed to double-play and 9.6 million (37%) subscribed to
single-play products.
From a regional standpoint, our Q1 2016 organic additions were
split relatively evenly between our operations in Western Europe,
which contributed 71,000 RGUs, and Central and Eastern Europe
("CEE"), which generated 64,000 additions, benefiting from network
expansion. In Western Europe, the result was led by Virgin Media in
the U.K., which posted 110,000 subscriber gains, its best Q1
performance since 2010 and a substantial increase from 23,000 net
adds in Q1 2015. This performance was driven by the success of our
winter marketing campaigns, highlighting our broadband speed
advantage, along with the penetration of our new "Lightning" homes.
Of note, we added a Q1 record 55,000 customers in the U.K.,
supported by record low churn. In Germany, Unitymedia delivered
24,000 RGU additions, in-line with its Q1 2015 result. This
represents a solid performance considering we initiated price
increases in Q1 2016 that impacted over four million customers, as
compared to price increases implemented in Q1 last year that only
impacted approximately one million customers. In April, we launched
a new promotional campaign in Germany to drive sales of higher-tier
bundles with speeds of at least 120 Mbps and expect to deliver
increased RGU additions during the balance of the year. Turning to
Belgium, Telenet added 6,000 subscribers, as the continued success
of its "Whop" and "Whoppa" bundles more than offset the impacts of
the intensely competitive environment and churn from Q1 price
increases that was in-line with our expectations.
Rounding out our largest markets, Switzerland experienced RGU
attrition of 16,000 in Q1 due in part to price increases across its
video base and portions of its internet base in an intensifying
competitive environment. In the Netherlands, Ziggo continued to
operate in a highly competitive landscape and lost 40,000
subscribers. This represents a modest year-over-year and sequential
improvement from the 47,000 and 52,000 RGU losses in Q1 2015 and Q4
2015, respectively. These improvements were mainly attributable to
lower churn, as the quality program implemented in the summer of
2015 and the success of Ziggo Sport contributed to Ziggo's lowest
churn rate since Q3 2014. With respect to our net promoter score
("NPS"), we have seen a significant sequential decline in customer
calls and an improvement in customer service levels, both of which
led to improved NPS related to customer service in Q1.
Looking at our product performance, we added 153,000 organic
broadband subscribers in Q1 2016, a 20% improvement as compared to
the 127,000 RGUs gained in Q1 2015. In particular, our U.K.
operation nearly tripled its additions from the prior-year period
and added 70,000 broadband subscribers, supported by superior
broadband speeds and sales in new build areas. In Germany, we added
40,000 broadband RGUs, an increase from 35,000 in Q1 2015, as fewer
broadband customers were impacted by price increases this year as
compared to last year. With respect to fixed-line telephony, we
added 124,000 subscribers in the quarter, a 54,000 RGU improvement
from the prior-year period.
In terms of video, we lost 142,000 subscribers in Q1 2016, a
modest improvement from the 164,000 attrition in the prior-year
period. The better result was primarily driven by the performance
in our CEE region and was supported by reduced churn levels in the
Netherlands, U.K. and Ireland. We ended the first quarter with 14.2
million enhanced video subscribers15, representing enhanced video
penetration16 of 65%, and 7.6 million basic video subscribers17.
During Q1 2016, we converted over 275,000 video subscribers into
next-generation video subscribers, including our innovative Horizon
TV and TiVo platforms. This total included 190,000 Horizon TV
subscribers and, as a result, we have surpassed the two million
subscriber mark for our Horizon suite of products. A notable
performer in the first quarter was the Netherlands, where we added
over 100,000 new Horizon TV subscribers for the third consecutive
quarter. In the U.K., we added almost 80,000 TiVo subscribers in
Q1, boosting our total TiVo base to nearly three million, which
represents 80% penetration of our U.K. video base. Of note, Virgin
Media is preparing for the launch of a new set-top box. With the
continued traction of our next-generation platforms, 35% of our
total video base (in countries that offer next-generation TV
services) subscribed to one of our next-generation platforms at
March 31, 2016, an increase from 28% at March 31, 2015.
In addition to our triple-play business, we finished Q1 2016
with 6.7 million mobile subscribers18. As compared to year-end
2015, we increased our total mobile subscribers base by 2.0
million, primarily due to the acquisition of BASE in Belgium with
2.0 million subscribers and, to a lesser extent, our organic gain
of 32,000 mobile subscribers. The organic additions consisted of
99,000 new postpaid subscribers, partially offset by the attrition
of 67,000 lower-ARPU19 prepaid subscribers. Our Western European
operations led this performance, adding 92,000 postpaid subscribers
in the quarter, while our CEE countries contributed 6,000
additions. From a country perspective, Belgium added 22,000
postpaid mobile subscribers organically in Q1 as a result of our
attractive "Family Deal" offers and the continued success of
split-contracts20 that began in Q3 2015. Elsewhere, the Netherlands
and Switzerland added 10,000 and 8,000 postpaid mobile subscribers,
respectively, while we had more modest additions in Austria,
Ireland and Germany. In the U.K., we continued our focus on gaining
postpaid subscribers, and our attractive Freestyle mobile
proposition helped us more than double our Q1 2016 postpaid
additions to 44,000, as compared to Q1 2015. Looking forward, we
are currently preparing for the launch of 4G mobile services in
Austria and Ireland, enabling us to provide our customers with
ubiquitous high-speed connectivity in and outside the home.
Revenue - Liberty Global Group (Europe)
Revenue attributed to the Liberty Global Group for the three
months ended March 31, 2016 grew 1% to $4.3 billion, as compared to
Q1 2015. The principal drivers of our reported growth in the first
quarter of 2016 were our organic revenue growth and the inclusion
of BASE in Belgium, which contributed $90 million of revenue for
the period from February 12 to March 31, 2016. This result was
partially offset by negative foreign currency ("FX") movements
related to the strengthening of the U.S. dollar against all of our
functional currencies. Adjusted for acquisitions, dispositions and
FX, our operations attributed to the Liberty Global Group achieved
year-over-year rebased revenue growth of 3% during Q1 2016. Of
note, our Q1 2016 rebased growth rate includes the net effect of
certain non-recurring and non-operational items, the most
significant of which was the $12 million net positive impact of the
upfront recognition of mobile handset revenue, largely in
connection with our split-contract20 programs in the U.K. and
Belgium.
From a product perspective, cable subscription revenue remains
the primary driver of our rebased revenue growth, powered by our
broadband internet success. We continue to expect our B2B
(including SOHO)21 and mobile operations to enhance our overall
growth in the coming years. In Q1 2016, B2B (including SOHO) and
mobile (including interconnect and handset sales) delivered rebased
revenue growth rates of 10% and 5%22, respectively, as compared to
Q1 2015.
In terms of regional results for the first quarter of 2016, we
delivered 3% rebased revenue growth in each of our Western European
and Central and Eastern European geographies. Our Western European
result was in-line with our prior-year results, while our CEE
region posted a year-over-year improvement from the 1% rebased
growth reported in Q1 2015, mainly driven by the net effect of
subscriber growth, primarily in Hungary, Romania and Poland, and
lower ARPU per RGU in all CEE countries, excluding our DTH
operation.
On a country specific level, our Western European results were
led by our performance in Germany and Belgium, with each reporting
5% rebased revenue growth. For each of these markets, the growth
was primarily fueled by higher ARPU per RGU, continued growth in
subscribers and, in the case of Telenet, increases in mobile
(including handset sales) and B2B revenue. Meanwhile, Virgin Media,
which represents nearly 40% of Liberty Global Group's revenue,
delivered 4% rebased growth for the three months ended March 31,
2016. This performance was supported by a wide range of drivers,
including continued subscriber growth, ARPU per RGU improvement,
higher mobile revenue (including handset sales) and B2B revenue
growth.
Elsewhere in Europe, our Swiss/Austrian operation posted 2%
rebased revenue growth during Q1, mainly driven by ARPU per RGU
expansion and volume growth in mobile. Rounding out our operations,
Ziggo experienced a 3% rebased revenue contraction on the back of
nearly 200,000 RGU losses in the last twelve months and a decline
in ARPU per RGU. Ziggo's revenue decline was partly offset by an
increase of $3 million from a favorable settlement in Q1 2016.
Looking ahead, given the lack of recent subscriber growth and the
current competitive environment, we expect continued top-line
pressure at Ziggo as we progress through 2016.
Operating Cash Flow - Liberty Global Group (Europe)
Reported OCF for the operations attributed to the Liberty Global
Group remained flat at $2.0 billion for the three months ended
March 31, 2016, as compared to the corresponding prior-year period.
This result was primarily driven by our organic OCF growth and the
aforementioned inclusion of BASE, largely offset by the negative
effects of FX movements. On a rebased basis, the operations
attributed to the Liberty Global Group reported 3% OCF growth for
the three months ended March 31, 2016. This rebased growth included
the net positive impact of the aforementioned revenue items and the
net positive impact of certain items that impacted our expenses,
the most significant of which was the lapping of $15 million of
costs associated with our rebranding and network and product
harmonization efforts at Ziggo, which were incurred in Q1 2015, but
did not recur this quarter.
From a geographic perspective, our Western European operations
reported 4% rebased OCF growth in the first quarter of 2016, up
from 3% rebased growth in the corresponding prior-year period. Our
operations in CEE reported a 3% rebased OCF contraction, as revenue
growth in this region was more than offset by higher costs largely
related to increased staff-related and sales and marketing costs
related to new build activities.
Turning back to Western Europe, our first quarter performance
was led by our Switzerland/Austria operation, which posted 8%
rebased OCF growth in Q1 2016, mainly driven by lower network and
marketing spend and supported by benefits from our integration of
Switzerland and Austria. In Germany, we delivered 6% rebased OCF
growth in Q1 2016, while U.K./Ireland posted 4% rebased OCF growth,
both mainly driven by the aforementioned top-line growth. Our
operations in Belgium reported 2% rebased OCF growth, supported by
the previously-mentioned revenue drivers and cost control,
partially offset by increased marketing spend and BASE integration
costs. Meanwhile in the Netherlands, Ziggo delivered 3% rebased OCF
growth, as reduced integration expenses and synergies realized
during Q1 2016 more than offset the aforementioned revenue
headwinds.
From an OCF margin23 perspective, the Liberty Global Group
reported 46.5% for the three months ended March 31, 2016, as
compared to the 47.0% margin we reported for the corresponding
prior-year period.
Property and Equipment Additions - Liberty Global Group
(Europe)
For the three months ended March 31, 2016, the Liberty Global
Group reported property and equipment ("P&E") additions24 of
$926 million or 21.6% of revenue, as compared to $869 million or
20.5% of revenue in the prior-year period. The increase in absolute
P&E additions was principally due to higher customer premises
equipment ("CPE") spend, as a result of higher subscriber volumes,
and increased line extension spend related to our new build
activities. These increases were partially offset by the
strengthening of the U.S. dollar against all of our European
currencies. In terms of our Q1 2016 P&E additions allocation,
43% pertained to line extensions, upgrade and rebuild and scalable
infrastructure, 33% was related to CPE and 24% was related to
support capital.
Free Cash Flow - Liberty Global Group (Europe)
During the first quarter of 2016, our operations attributed to
the Liberty Global Group experienced negative Free Cash Flow of
$105 million, as compared to positive FCF of $356 million in Q1
2015. This variance is attributable to trade working capital and
vendor financing outflows and is in-line with our expectations as
we anticipate our FCF to be weighted toward the second half of the
year. As a result, we are reconfirming our Liberty Global Group
guidance of over $2.0 billion of FCF for 2016.
Leverage, Liquidity & Shares Outstanding - Liberty Global
Group (Europe)
At March 31, 2016, we attributed $47.1 billion of third-party
debt25 and $685 million of cash and cash equivalents to the Liberty
Global Group. As compared to December 31, 2015, our reported
third-party debt increased by $2.3 billion, primarily due to $1.4
billion equivalent amount of debt associated with the acquisition
of BASE and the strengthening of most of our borrowing currencies
against the U.S. dollar.
After excluding $2.5 billion of debt backed by shares we hold in
ITV plc, Sumitomo Corporation and Lions Gate Entertainment Corp.,
the Liberty Global Group's consolidated adjusted gross and net
leverage ratios were 5.4x and 5.3x, respectively, at March 31,
2016. These ratios increased from Q4 2015 due to a sequential
decrease in the quarterly OCF, higher debt balances on a reported
basis associated with the weakening of the U.S. dollar and the
inclusion of BASE. The Liberty Global Group's average tenor of
third-party debt was over seven years at the end of the first
quarter of 2016, 88% of which is due in 2021 and after. Our blended
fully-swapped borrowing cost of such debt was 4.7% at March 31,
2016.
With respect to our consolidated liquidity position, we finished
Q1 2016 with approximately $3.9 billion, including $685 million of
cash, and the aggregate unused borrowing capacity under our credit
facilities26 of $3.2 billion.
At May 4, 2016, we had 841 million Liberty Global Group shares
outstanding, including 253 million Class A ordinary shares, 11
million Class B ordinary shares and 577 million Class C ordinary
shares.
Subscriber Statistics - LiLAC Group
At March 31, 2016, we provided a total of 3.5 million
subscription services to our 1.7 million unique customers across
our cable footprint of 4.2 million homes passed within Chile and
Puerto Rico. From a product perspective, these services consisted
of 1.3 million video, 1.3 million broadband internet and 0.9
million telephony subscriptions. In Q1 2016, we increased our RGU
base by 21,000, as compared to 36,000 net additions in Q1 2015, as
a year-over-year improvement in video was more than offset by voice
losses. On the customer front, we added 16,000 customers
organically during Q1 2016, our best quarterly result in three
years.
From a geographic perspective, our operation in Chile added
16,000 RGUs in the first quarter of 2016. On the video front, we
delivered 4,000 RGU additions, a substantial increase from our
results in Q1 2015. This performance was due in part to the
continued success of our “Vive Más” bundles, featuring our
market-leading HD channel line-up. With 13 new HD channels added in
Q1, we remain the leader in Chile offering the most HD channels of
any fixed-line provider. Looking ahead to the second half of 2016,
we are preparing for the introduction of Horizon TV, our
next-generation video platform.
During the quarter, VTR delivered 23,000 broadband subscriber
additions and increased its top broadband speed to 160 Mbps. We
continue to see increased demand for our superior broadband speed,
as evidenced by 50% of sales realized in the 80 Mbps or higher
range in Q1 2016. Rounding out our triple-play performance, VTR
lost 12,000 fixed-line telephony RGUs in the quarter, partly due to
customers migrating from triple-play bundles to double-play
broadband and video bundles.
In terms of mobile subscribers, we maintained a subscriber base
of 132,000 as of the end of Q1 2016. During the quarter, our 1,000
postpaid mobile additions were offset by our 1,000 low-margin
prepaid mobile losses. Our Q1 2016 results represented a modest
improvement versus our Q4 2015 performance despite the on-going
competitive landscape that resulted from the emergence of an
aggressive, low-priced competitor in the second half of 2015. We
expect that the Chilean mobile market will remain highly
competitive for the remainder of 2016.
Moving to Puerto Rico, we added 5,000 RGUs in Q1 2016,
consisting of RGU gains of 4,000 and 2,000 in voice and broadband,
respectively, and video RGU losses of 1,000. In April, we
re-branded the former Choice footprint and currently serve the
entire island of Puerto Rico under our flagship Liberty Puerto Rico
brand. Under the consolidated brand, our customers across Puerto
Rico will be able to enjoy all of Liberty's product offerings,
including broadband speeds of up to 200 Mbps, over 120 HD channels
and Liberty Everywhere, our multi-screen video service that allows
customers to access over 60 channels on any device, regardless of
their location on the island.
Revenue - LiLAC Group
For the three months ended March 31, 2016, LiLAC Group revenue
increased 6% year-over-year to $304 million. The principal drivers
of our reported growth for Q1 were the inclusion of Choice in
Puerto Rico and our organic revenue growth, partially offset by the
negative impact of the 12% decline of the Chilean Peso against the
U.S. dollar during the quarter. Adjusted for the offsetting impacts
of the Choice acquisition and FX, the businesses attributed to the
LiLAC Group delivered year-over-year rebased revenue growth of
6%.
From a country perspective, our Chilean operation reported
year-over-year rebased revenue growth of 8% in Q1 2016, VTR's
strongest Q1 result in three years. This result was primarily
attributable to an increase in cable subscription revenue, driven
by an increase in ARPU per RGU and growth in subscribers. Meanwhile
in Puerto Rico, we grew rebased revenue by 3% in the first quarter
of 2016, as compared to the corresponding prior-year period. Our
revenue growth in the quarter was driven by the net impact of
organic subscriber growth, the continued success of our B2B
business (including SOHO), which posted rebased revenue growth in
excess of 20%, and a decline in ARPU per RGU.
Operating Cash Flow - LiLAC Group
For the operations attributed to the LiLAC Group, our reported
OCF increased 13% year-over-year to $122 million for the three
months ended March 31, 2016, as our organic growth and the
contribution from the Choice acquisition were only partially offset
by the aforementioned negative impact of FX. From a rebased
perspective, we delivered 11% year-over-year OCF growth in the
first quarter.
On a country specific level, Chile reported 13% rebased OCF
growth for the three months ended March 31, 2016. This result was
primarily due to the aforementioned revenue drivers and operational
leverage, as the increase in VTR's revenue significantly exceeded
the increases in its programming and other costs. In Puerto Rico,
we delivered rebased OCF growth of 7% in Q1 2016, driven in part by
the previously mentioned revenue growth drivers and SG&A cost
reductions in Q1.
The LiLAC Group's reported OCF margin increased by 250 basis
points to 40.1% in Q1, as compared to the prior-year period.
Property and Equipment Additions - LiLAC Group
For the three months ended March 31, 2016, operations attributed
to the LiLAC Group reported P&E additions of $72 million or
23.5% of revenue, as compared to $56 million or 19.5% of revenue in
Q1 2015. The increase in absolute P&E additions was primarily
related to higher spend for new build and upgrade projects,
partially offset by the depreciation of the Chilean peso against
the U.S. dollar. From a capital allocation perspective in Q1 2016,
49% of our spend was related to CPE, 33% to scalable
infrastructure, line extensions and upgrade/rebuild activity and
18% to support capital, including IT upgrades and general support
systems.
Free Cash Flow - LiLAC Group
The operations attributed to the LiLAC Group generated $20
million of FCF in Q1 2016, as compared to negative $26 million in
the corresponding prior-year period. The positive variance was
mainly attributable to lower derivative payments and organic OCF
growth, which were only partially offset by higher interest
payments due to the inclusion of Choice debt. The lower derivative
payments in the quarter were directly attributable to the
re-striking of all of the derivatives associated with VTR's $1.4
billion principal amount of senior secured notes during the second
half of 2015.
Leverage, Liquidity & Shares Outstanding - LiLAC
Group
We had total third-party debt attributed to the LiLAC Group of
$2.3 billion and cash and cash equivalents of $296 million at March
31, 2016. As compared to December 31, 2015, our reported
third-party debt attributed to the LiLAC Group was largely
unchanged, while the cash balance attributed to the LiLAC Group
improved by $21 million.
At the end of Q1 2016, the gross and net leverage ratios
associated with the debt attributed to the LiLAC Group were 4.9x
and 4.3x, respectively. The LiLAC Group's average tenor of
third-party debt was over seven years, with minimal maturities
prior to 2022, and our blended fully-swapped borrowing cost of such
debt was 6.0%, flat as compared to the end of 2015.
At May 4, 2016, we had 44 million LiLAC shares outstanding,
including 13 million Class A ordinary shares, 0.5 million Class B
ordinary shares and 31 million Class C ordinary shares.
Profit Forecast for Liberty Global for the Year ending
December 31, 2016
Liberty Global is currently in an offer period (as defined in
the City Code on Takeovers and Mergers (the “Code”)) with respect
to Cable & Wireless Communications Plc ("Cable &
Wireless"). Accordingly, pursuant to the requirements of Rule 28 of
the Code, by publishing an ordinary course "profit forecast" in
this release Liberty Global is required to include a statement by
the Directors that such profit forecast is valid. In addition, we
must include in this release a confirmation by our Directors that
the profit forecast has been properly compiled on the basis of the
assumptions stated and that the basis of accounting used is
consistent with Liberty Global’s accounting policies.
As noted in the release, Liberty Global today is confirming its
full-year 2016 financial guidance targets, which includes the
following statements:
- Full-year guidance of 5% to 7% rebased
OCF growth, for Liberty Global Group, excluding the Netherlands and
BASE
- Full-year guidance of 5% to 7% rebased
OCF growth for LiLAC Group, excluding Cable & Wireless
While our OCF measure should not be considered a measurement of
profit, the above statements for the year ending December 31, 2016,
constitute "profit forecasts" for the purposes of the Code (the
“Liberty Global Profit Forecast”). Please see Operating Cash Flow
Definition and Reconciliation below for our Operating Cash Flow
(“OCF”) definition and the required reconciliation and how we
calculate rebased growth rates.
The Liberty Global Profit Forecast has been prepared on a basis
consistent with the accounting policies for Liberty Global, which
are in accordance with generally accepted accounting standards in
the U.S. and those which Liberty Global anticipates will be
applicable for the full year ending December 31, 2016. Liberty
Global has prepared the Liberty Global Profit Forecast based on
audited financial results for the year ended December 31, 2015,
unaudited financial results for the three months ended March 31,
2016, and an internal management forecast to December 31, 2016.
In accordance with Rule 28.4(a) of the Code, the principal
assumptions upon which the profit forecast is based are included
below. Our 2016 guidance for Liberty Global Group mentioned above
excludes our Dutch business Ziggo and the recently acquired BASE in
Belgium, whereas the 2016 guidance for LiLAC Group excludes Cable
& Wireless. In accordance with Rule 28.4(c) of the Code, there
is a clear distinction made between assumptions which the Directors
of Liberty Global (or other members of Liberty Global’s management)
can influence and those which they cannot influence.
Factors outside the influence or control of Liberty Global and
its Directors:
- economic and business conditions and
industry trends in the countries in which we operate;
- the competitive environment in the
industries in the countries in which we operate, including
competitor responses to our products and services;
- fluctuations in currency exchange rates
and interest rates;
- instability in global financial
markets, including sovereign debt issues and related fiscal
reforms;
- consumer disposable income and spending
levels, including the availability and amount of individual
consumer debt;
- changes in consumer television viewing
preferences and habits;
- consumer acceptance of our existing
service offerings, including our digital video, broadband internet,
fixed-line telephony, mobile and business service offerings, and of
new technology, programming alternatives and other products and
services that we may offer in the future;
- changes in laws or treaties relating to
taxation, or the interpretation thereof, in the U.K., U.S. or in
other countries in which we operate;
- changes in laws and government
regulations that may impact the availability and cost of capital
and the derivative instruments that hedge certain of our financial
risks;
- 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; and
- events that are outside of our control,
such as political unrest in international markets, terrorist
attacks, malicious human acts, natural disasters, pandemics and
other similar events.
Factors within the influence or control of Liberty Global and
its Directors:
- our ability to maintain or increase the
number of subscriptions to our digital video, broadband internet,
fixed-line telephony and mobile service offerings and our average
revenue per household;
- our ability to maintain or increase
rates to our subscribers or to pass through increased costs to our
subscribers;
- there will be no material change in the
present management or control of Liberty Global or its existing
operational strategy; and
- Liberty Global’s accounting policies
will be consistently applied in the financial year to December 31,
2016.
The Directors of Liberty Global have considered the Liberty
Global Profit Forecast and confirm that it is valid as at the date
of this document and has been properly compiled on the basis of the
assumptions set out above and that the basis of the accounting used
is consistent with Liberty Global’s accounting policies.
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; expected RGU additions and OCF
growth for H2 of 2016; property and equipment additions as a
percentage of revenue; the development, enhancement and expansion
of our superior networks and innovative and advanced products and
services, including higher broadband speed rollouts, expansion and
launches of next-generation video services, set-top boxes, new
channels (including phase-out of analog channels) and 4G; our
mobile and B2B strategies and marketing efforts; plans and
expectations relating to new build and network extension
opportunities, including estimated number of homes to be built out
and the costs associated therewith; the strength of our operating
companies’ balance sheets and tenor of their third-party debt;
plans and impacts of reorganizations and integrations, including
synergies; the pending acquisition of Cable and Wireless and the
joint venture in the Netherlands and the anticipated benefits,
costs and synergies in connection therewith; the competitive
environment and impacts thereof, in particular in the Netherlands
and Chile; and other information and statements that are not
historical fact. These forward-looking statements involve certain
risks and uncertainties that could cause actual results to differ
materially from those expressed or implied by these statements.
These risks and uncertainties include the continued use by
subscribers and potential subscribers of our services and their
willingness to upgrade to our more advanced offerings; our ability
to meet challenges from competition, to manage rapid technological
change or to maintain or increase rates to our subscribers or to
pass through increased costs to our subscribers; the effects of
changes in laws or regulation; our ability to maintain certain
accreditations; general economic factors; our ability to obtain
regulatory approval and satisfy regulatory conditions associated
with acquisitions and dispositions; our ability to successfully
acquire and integrate new businesses and realize anticipated
efficiencies from businesses we acquire; the availability of
attractive programming for our digital video services and the costs
associated with such programming; our ability to achieve forecasted
financial and operating targets; the outcome of any pending or
threatened litigation; the ability of our operating companies to
access cash of their respective subsidiaries; the impact of our
operating companies' future financial performance, or market
conditions generally, on the availability, terms and deployment of
capital; fluctuations in currency exchange and interest rates; the
ability of suppliers and vendors (including our third-party
wireless network providers under our MVNO arrangements) to timely
deliver quality products, equipment, software, services and access;
our ability to adequately forecast and plan future network
requirements including the costs and benefits associated with
network expansions; and other factors detailed from time to time in
our filings with the Securities and Exchange Commission, including
Liberty Global's most recently filed Form 10-K 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 largest international cable company with
operations in 14 countries. We connect people to the digital world
and enable them to discover and experience its endless
possibilities. Our market-leading products are provided through
next-generation networks and innovative technology platforms that
connected 27 million customers subscribing to 57 million
television, broadband internet and telephony services at March 31,
2016. In addition, we served seven million mobile subscribers and
offered WiFi service across six million access points.
Liberty Global’s businesses are currently attributed to two
tracking stock groups: the Liberty Global Group (NASDAQ: LBTYA,
LBTYB and LBTYK), which primarily comprises our European
operations, and the LiLAC Group (NASDAQ: LILA and LILAK, OTC Link:
LILAB), which comprises our operations in Latin America and the
Caribbean.
Liberty Global's consumer brands are Virgin Media, Ziggo,
Unitymedia, Telenet, UPC, VTR and Liberty. Our operations also
include Liberty Global Business Services and Liberty Global
Ventures. For more information, please visit
www.libertyglobal.com.
Footnotes
1 On July 1, 2015, Liberty Global completed the "LiLAC
Transaction" pursuant to which each holder of Liberty Global’s
then-outstanding ordinary shares remained a holder of the same
amount and class of new Liberty Global ordinary shares and received
one share of the corresponding class of LiLAC ordinary shares for
each 20 then-outstanding Liberty Global ordinary shares held as of
the record date for such distribution, with cash issued in lieu of
fractional LiLAC ordinary shares. The Liberty Global ordinary
shares following the LiLAC Transaction and the LiLAC ordinary
shares are tracking shares. Tracking shares are intended by the
issuing company to reflect or “track” the economic performance of a
particular business or “group,” rather than the economic
performance of the company as a whole. The Liberty Global ordinary
shares and the LiLAC ordinary shares are intended to reflect or
“track” the economic performance of the Liberty Global Group and
the LiLAC Group (each as defined and described below),
respectively. 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 9, 2016
(the "10-Q"). “Liberty Global Group” does not represent a separate
legal entity, rather it represents those businesses, assets and
liabilities that have been attributed to that group. The Liberty
Global Group comprises our businesses, assets and liabilities not
attributed to the LiLAC Group, including Virgin Media, Unitymedia,
UPC Holding BV, Telenet and Ziggo Group Holding. “LiLAC Group” does
not represent a separate legal entity, rather it represents those
businesses, assets and liabilities that have been attributed to
that group. The LiLAC Group comprises our operations in Latin
America and the Caribbean and has attributed to it VTR and Liberty
Puerto Rico. 2 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, 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. 3 Please see
Revenue and Operating Cash Flow for information on rebased growth.
4 Please see Operating Cash Flow Definition and Reconciliation for
our Operating Cash Flow ("OCF") definition and the required
reconciliation. 5 Please see Free Cash Flow Definition and
Reconciliation for information on 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 including in our
Form 10-Q. 6 Our FCF guidance for 2016, which includes the
Netherlands, but excludes BASE and Cable & Wireless, is based
on FX rates as of February 10, 2016. 7 Our next-generation video
base consists of Horizon TV, TiVo (in the U.K.), Digital TV with
Horizon-like user interface (in Belgium) as well as Horizon Light
set-top boxes. 8 Our gross and net debt ratios are defined as total
debt and net debt to annualized OCF of the latest quarter. Net debt
is defined as total debt less cash and cash equivalents. For
purposes of these calculations, debt is measured using swapped
foreign currency rates, consistent with the covenant calculation
requirements of our subsidiary debt agreements, and, in the case of
the Liberty Global Group, excludes the loans backed by the shares
we hold in ITV plc, Sumitomo Corporation and Lions Gate
Entertainment Corp. For Liberty Global plc and Liberty Global
Group, our ratios are adjusted to reflect the Q1 2016
pre-acquisition OCF of BASE company. 9 Our blended fully-swapped
debt borrowing cost represents the weighted average interest rate
on our aggregate variable- and fixed-rate indebtedness (excluding
capital lease obligations), including the effects of derivative
instruments, original issue premiums or discounts and commitment
fees, but excluding the impact of financing costs. 10 Liquidity
refers to cash and cash equivalents plus the maximum undrawn
commitments under subsidiary borrowing facilities, without regard
to covenant compliance calculations. 11 Please see Footnotes for
Operating Data and Subscriber Variance Tables for the definition of
Customer Relationships. 12 Customer Churn represents the rate at
which customers relinquish their subscriptions. The annual rolling
average basis is calculated by dividing the number of disconnects
during the preceding 12 months by the average number of customer
relationships. For the purpose of computing churn, a disconnect is
deemed to have occurred if the customer no longer receives any
level of service from us and is required to return our equipment. A
partial product downgrade, typically used to encourage customers to
pay an outstanding bill and avoid complete service disconnection is
not considered to be disconnected for purposes of our churn
calculations. Customers who move within our cable footprint and
upgrades and downgrades between services are also excluded from the
disconnect figures used in the churn calculation. 13 We have
increased our estimate of the annual run-rate synergies to be
achieved in connection with Telenet's integration of BASE from
approximately €150 million to approximately €220 million. These
estimated annual run-rate synergies are based on Telenet management
assumptions, and mainly represent the estimated annual run-rate
OPEX savings to be achieved by fiscal year 2020. We have also
increased our estimate of the projected one-off expenditures that
we will make following our acquisition of BASE from approximately
€240 million to approximately €300 million. These estimated
expenditures include targeted investments in BASE's mobile network
of approximately €250 million, most of which will occur over the
next few years. 14 Please see Footnotes for Operating Data and
Subscriber Variance Tables for the definition of Homes Passed. 15
Enhanced Video Subscriber - please see Footnotes for Operating Data
and Subscriber Variance Tables for our Enhanced Video Subscriber
definition. 16 Enhanced video penetration is calculated by dividing
the number of enhanced video RGUs by the total number of basic and
enhanced video RGUs. 17 Please see Footnotes for Operating Data and
Subscriber Variance Tables for the definition of Basic Video
Subscriber. 18 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. 19 Average Revenue Per Unit (“ARPU”) refers to
the average monthly subscription revenue per average customer
relationship and is calculated by dividing the average monthly
cable subscription revenue (excluding mobile services, B2B
services, interconnect, channel carriage fees, mobile handset sales
and installation fees) for the indicated period, by the average of
the opening and closing balances for customer relationships for the
period. Customer relationships of entities acquired during the
period are normalized. Unless otherwise indicated, ARPU per
customer relationship for the Liberty Global Group and LiLAC Group
are not adjusted for currency impacts. 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. 20 In the U.K. and Belgium, we now offer our
customers 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. 21 Total B2B includes subscription
(SOHO) and non-subscription revenue. Non-subscription revenue
includes the amortization of deferred upfront installation fees and
deferred non-recurring fees received on B2B contracts where we
maintain ownership of the installed equipment. Most of this
deferred revenue relates to Virgin Media's B2B contracts, and in
connection with the application of the Virgin Media acquisition
accounting, we eliminated all of Virgin Media's B2B deferred
revenue as of the June 7, 2013 acquisition date. Due primarily to
this acquisition accounting, the amortization of Virgin Media's
deferred revenue is accounting for $4.4 million of the increase in
Liberty Global Group's total B2B revenue for the three months ended
March 31, 2016. 22 Liberty Global Group's 5.4% rebased mobile
revenue growth for Q1 2016 includes the positive impact of our
split-contract and non-subsidized handset sale programs in the U.K.
and Belgium, as further described above. Our split-contract
programs in the U.K. and Belgium had a net positive effect on our
mobile subscription and handset revenue of $12.1 million in Q1
2016. The net positive effect of the split-contract and
non-subsidized handset sale programs is comprised of (i) an
increase in handset revenue of $36.0 million and (ii) a decrease in
mobile subscription revenue of $23.9 million during Q1 2016. 23 OCF
margin is calculated by dividing OCF by total revenue for the
applicable period. 24 Our property and equipment additions include
our capital expenditures on an accrual basis and amounts financed
under vendor financing or capital lease arrangements. 25 Represents
principal amount of third-party debt and includes capital leases.
26 Our aggregate unused borrowing capacity of $3.5 billion
represents the maximum undrawn commitments under our subsidiaries'
applicable facilities without regard to covenant compliance
calculations. This consists of $3.2 billion attributed to the
Liberty Global Group and $233 million attributed to LiLAC Group.
Upon completion of the relevant March 31, 2016 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 $2.7 billion. This
consists of $2.5 billion attributed to the Liberty Global Group and
$233 million attributed to the LiLAC Group.
Balance Sheets, Statements of Operations and Statements of
Cash Flows
The condensed consolidated balance sheets, statements of
operations and statements of cash flows of Liberty Global are
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,
2016, as compared to the corresponding prior-year period. All of
our reportable segments derive their revenue primarily from
broadband communications services, including video, broadband
internet and fixed-line telephony services. Most of our reportable
segments also provide B2B and mobile services. For detailed
information regarding the composition of our reportable segments,
including information regarding a change to our reportable segments
that we made during the second quarter of 2015, see note 14 to our
condensed consolidated financial statements included in our
10-Q.
For purposes of calculating rebased growth rates on a comparable
basis for all businesses that we owned during 2016, we have
adjusted our historical revenue and OCF for the three months ended
March 31, 2015 to (i) include the pre-acquisition revenue and OCF
of certain entities acquired during 2015 and 2016 in our rebased
amounts for the three months ended March 31, 2015 to the same
extent that the revenue and OCF of such entities are included in
our results for the three months ended March 31, 2016, (ii) exclude
the pre-disposition revenue and OCF of "offnet" subscribers in the
U.K. that were disposed in the fourth quarter of 2014 and the first
half of 2015 from our rebased amounts for the three months ended
March 31, 2015 to the same extent that the revenue and OCF of these
disposed subscribers is excluded from our results for the three
months ended March 31, 2016, (iii) exclude the revenue and OCF
related to a partner network agreement that was terminated shortly
after the Ziggo acquisition from our rebased amounts for the three
months ended March 31, 2015 to the same extent that the revenue and
OCF from this partner network is excluded from our results for the
three months ended March 31, 2016, (iv) exclude the pre-disposition
revenue, OCF and associated intercompany eliminations of Film1,
which was disposed in the third quarter of 2015, from our rebased
amounts for the three months ended March 31, 2015 to the same
extent that the revenue, OCF and associated intercompany
eliminations are excluded from our results for the three months
ended March 31, 2016, (v) 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, 2015 to the same extent that the revenue and
OCF of these subscribers is excluded from our results for the three
months ended March 31, 2016 and (vi) reflect the translation of our
rebased amounts for the three months ended March 31, 2015 at the
applicable average foreign currency exchange rates that were used
to translate our results for the three months ended March 31, 2016.
We have included BASE, Choice and two small entities in whole or in
part in the determination of our rebased revenue and OCF for the
three months ended March 31, 2015. We have reflected the revenue
and OCF of the acquired entities in our 2015 rebased amounts based
on what we believe to be the most reliable information that is
currently available to us (generally pre-acquisition financial
statements), as adjusted for the estimated effects of (a) any
significant differences between Generally Accepted Accounting
Principles in the United States (“GAAP”) and local generally
accepted accounting principles, (b) any significant effects of
acquisition accounting adjustments, (c) any significant differences
between our accounting policies and those of the acquired entities
and (d) other items we deem appropriate. We do not adjust
pre-acquisition periods to eliminate non-recurring items or to give
retroactive effect to any changes in estimates that might be
implemented during post-acquisition periods. As we did not own or
operate the acquired businesses during the pre-acquisition periods,
no assurance can be given that we have identified all adjustments
necessary to present the revenue and OCF of these entities on a
basis that is comparable to the corresponding post-acquisition
amounts that are included in our historical results or that the
pre-acquisition financial statements we have relied upon do not
contain undetected errors. The adjustments reflected in our rebased
amounts have not been prepared with a view towards complying with
Article 11 of Regulation S-X. In addition, the rebased growth
percentages are not necessarily indicative of the revenue and OCF
that would have occurred if these transactions had occurred on the
dates assumed for purposes of calculating our rebased amounts or
the revenue and OCF that will occur in the future. The rebased
growth percentages have been presented as a basis for assessing
growth rates on a comparable basis, and are not presented as a
measure of our pro forma financial performance. Therefore, we
believe our rebased data is not a non-GAAP financial measure as
contemplated by Regulation G or Item 10 of Regulation S-K.
In each case, the following tables present (i) the amounts
reported by each of our reportable segments for the comparative
periods, (ii) the U.S. dollar change and percentage change from
period to period and (iii) the percentage change from period to
period on a rebased basis:
Three months ended Increase
Increase March 31, (decrease)
(decrease) Revenue 2016 2015
$ % Rebased % in millions, except %
amounts Liberty Global Group: European Operations
Division: U.K./Ireland $ 1,686.5 $ 1,711.4 $ (24.9 ) (1.5 ) 3.7 The
Netherlands 669.8 707.4 (37.6 ) (5.3 ) (3.1 ) Germany 617.1 597.9
19.2 3.2 5.4 Belgium 610.2 502.7 107.5 21.4 5.1 Switzerland/Austria
433.4 439.3 (5.9 ) (1.3 ) 2.3 Total Western
Europe 4,017.0 3,958.7 58.3 1.5 2.8 Central and Eastern Europe
266.1 268.2 (2.1 ) (0.8 ) 2.6 Central and other (2.4 ) (2.8 ) 0.4
N.M. * Total European Operations Division 4,280.7
4,224.1 56.6 1.3 2.8 Corporate and other 14.6 12.8 1.8 14.1 *
Intersegment eliminations (11.2 ) (7.8 ) (3.4 ) N.M. * Total
Liberty Global Group 4,284.1 4,229.1 55.0 1.3
2.8 LiLAC Group: Chile 200.0 208.8 (8.8 ) (4.2 ) 7.6
Puerto Rico 103.9 79.0 24.9 31.5 2.8
Total LiLAC Group 303.9 287.8 16.1 5.6
5.9 Total $ 4,588.0 $ 4,516.9 $ 71.1
1.6 3.0 Total Liberty Global Group
excl. NL & BASE 4.0
Three months ended
Increase Increase March 31,
(decrease) (decrease) OCF 2016
2015 $ % Rebased % in
millions, except % amounts Liberty Global Group:
European Operations Division: U.K./Ireland $ 744.6 $ 763.3 $ (18.7
) (2.4 ) 3.6 The Netherlands 367.9 367.9 — — 2.7 Germany 379.4
364.0 15.4 4.2 6.3 Belgium 269.8 247.0 22.8 9.2 2.4
Switzerland/Austria 258.1 248.8 9.3 3.7
7.8 Total Western Europe 2,019.8 1,991.0 28.8 1.4 4.3
Central and Eastern Europe 110.9 118.1 (7.2 ) (6.1 ) (2.9 ) Central
and other (84.3 ) (67.9 ) (16.4 ) N.M. * Total
European Operations Division 2,046.4 2,041.2 5.2 0.3 3.1 Corporate
and other (52.8 ) (52.1 ) (0.7 ) (1.3 ) * Total Liberty
Global Group 1,993.6 1,989.1 4.5 0.2
3.0 LiLAC Group: LiLAC Division: Chile 76.3 76.0 0.3 0.4
12.9 Puerto Rico 46.8 33.5 13.3 39.7
7.3 Total LiLAC Division 123.1 109.5 13.6 12.4 10.7
Corporate and other (1.2 ) (1.3 ) 0.1 N.M. *
Total LiLAC Group 121.9 108.2 13.7 12.7
10.9
Total
$ 2,115.5 $ 2,097.3 $ 18.2 0.9 3.4
Total Liberty Global Group excl. NL and BASE 3.1
* - Omitted; N.M. - Not Meaningful
Operating Cash Flow Definition and Reconciliation
As used herein, OCF has the same meaning as the term "Adjusted
OIBDA" that is referenced in our 10-Q. OCF is the primary measure
used by our chief operating decision maker to evaluate segment
operating performance. OCF is also a key factor that is used by our
internal decision makers to (i) determine how to allocate resources
to segments and (ii) evaluate the effectiveness of our management
for purposes of annual and other incentive compensation plans. As
we use the term, OCF is defined as operating income before
depreciation and amortization, share-based compensation, provisions
and provision releases related to significant litigation and
impairment, restructuring and other operating items. Other
operating items include (a) gains and losses on the disposition of
long-lived assets, (b) third-party costs directly associated with
successful and unsuccessful acquisitions and dispositions,
including legal, advisory and due diligence fees, as applicable,
and (c) other acquisition-related items, such as gains and losses
on the settlement of contingent consideration. Our internal
decision makers believe OCF is a meaningful measure and is superior
to available GAAP measures because it represents a transparent view
of our recurring operating performance that is unaffected by our
capital structure and allows management to (1) readily view
operating trends, (2) perform analytical comparisons and
benchmarking between segments and (3) identify strategies to
improve operating performance in the different countries in which
we operate. We believe our OCF measure is useful to investors
because it is one of the bases for comparing our performance with
the performance of other companies in the same or similar
industries, although our measure may not be directly comparable to
similar measures used by other public companies. OCF should be
viewed as a measure of operating performance that is a supplement
to, and not a substitute for, operating income, net earnings or
loss, cash flow from operating activities and other GAAP measures
of income or cash flows. A reconciliation of total segment
operating cash flow to our operating income is presented below.
Three months ended March 31, 2016
2015 in millions Total segment operating cash
flow $ 2,115.5 $ 2,097.3 Share-based compensation expense (69.0 )
(71.4 ) Depreciation and amortization (1,435.5 ) (1,451.4 )
Impairment, restructuring and other operating items, net (24.4 )
(17.0 ) Operating income $ 586.6 $ 557.5
Summary of Debt, Capital Lease Obligations and Cash and Cash
Equivalents
The following table1 details the U.S. dollar equivalent balances
of our third-party consolidated debt, capital lease obligations and
cash and cash equivalents at March 31, 2016:
Capital Debt & Capital
Cash Lease Lease and Cash
Debt2 Obligations Obligations
Equivalents in millions
Liberty Global and Liberty Global
Group unrestricted subsidiaries
$ 2,622.6 $ 63.8 $ 2,686.4 $ 150.1 Virgin Media3 15,005.5 147.4
15,152.9 270.6 UPC Holding 6,696.9 27.6 6,724.5 18.8 Unitymedia
7,963.0 729.8 8,692.8 2.8 Ziggo Group Holding 8,171.9 0.3 8,172.2
3.6 Telenet 5,275.0 394.6 5,669.6 239.0 Total
Liberty Global Group 45,734.9 1,363.5 47,098.4
684.9 LiLAC Group unrestricted subsidiaries — — — 80.8 VTR Finance
1,400.0 0.2 1,400.2 130.5 Liberty Puerto Rico 942.5 0.5
943.0 84.3 Total LiLAC Group 2,342.5 0.7
2,343.2 295.6 Total $ 48,077.4 $ 1,364.2
$ 49,441.6 $ 980.5
Property and Equipment Additions and Capital
Expenditures
The tables below highlight the categories of the property and
equipment additions attributed to the Liberty Global Group and the
LiLAC Group for the indicated periods and reconciles those
additions to the capital expenditures that are presented in the
attributed statements of cash flows included in Exhibit 99.1 to our
10-Q:
Liberty Global Group
Three months ended March 31, 2016
2015 in millions, except % amounts Customer
premises equipment $ 301.6 $ 268.3 Scalable infrastructure 169.4
168.5 Line extensions 123.6 94.0 Upgrade/rebuild 113.0 119.3
Support capital & other 217.9 218.7 Property and
equipment additions 925.5 868.8 Assets acquired under
capital-related vendor financing arrangements4 (438.9 ) (295.0 )
Assets acquired under capital leases (27.9 ) (62.0 ) Changes in
current liabilities related to capital expenditures 128.4
99.6 Capital expenditures5 $ 587.1 $ 611.4
Property and equipment additions as % of revenue 21.6 % 20.5
%
LiLAC Group
Three months ended March
31, 2016 2015 in millions, except %
amounts Customer premises equipment $ 34.8 $ 33.0 Scalable
infrastructure 12.0 10.8 Line extensions 10.0 2.1 Upgrade/rebuild
1.7 1.2 Support capital & other 13.0 9.0 Property
and equipment additions 71.5 56.1 Changes in current liabilities
related to capital expenditures (21.5 ) (6.3 ) Capital expenditures
$ 50.0 $ 49.8 Property and equipment additions
as % of revenue 23.5 % 19.5 %
______________________________
1 Except as otherwise indicated, the amounts reported in the
table include the named entity and its subsidiaries. 2 Debt amounts
for UPC Holding, Ziggo Group Holding and Telenet include notes
issued by special purpose entities that are consolidated by each. 3
The Virgin Media borrowing group includes certain subsidiaries of
Virgin Media, but excludes Virgin Media. The cash and cash
equivalents amount includes cash and cash equivalents held by the
Virgin Media borrowing group, but excludes $0.2 million of cash and
cash equivalents held by Virgin Media. This amount is included in
the amount shown for Liberty Global and Liberty Global Group
unrestricted subsidiaries. In addition, the $55 million principal
amount of the 6.5% convertible notes of Virgin Media is excluded
from the debt of the Virgin Media borrowing group and included in
the debt of Liberty Global and Liberty Global Group unrestricted
subsidiaries. 4 Amounts exclude related VAT of $61 million and $35
million, 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.
Free Cash Flow Definition and Reconciliation
We define free cash flow as net cash provided by our operating
activities, plus (i) excess tax benefits related to the exercise of
share-based incentive awards, (ii) cash payments for third-party
costs directly associated with successful and unsuccessful
acquisitions and dispositions and (iii) expenses financed by an
intermediary, less (a) capital expenditures, as reported in our
condensed consolidated statements of cash flows, (b) principal
payments on amounts financed by vendors and intermediaries and (c)
principal payments on capital leases (exclusive of the portions of
the network lease in Belgium and the duct leases in Germany that we
assumed in connection with certain acquisitions), with each item
excluding any cash provided or used by our discontinued operations.
We believe that our presentation of free cash flow provides useful
information to our investors because this measure can be used to
gauge our ability to service debt and fund new investment
opportunities. Free cash flow should not be understood to represent
our ability to fund discretionary amounts, as we have various
mandatory and contractual obligations, including debt repayments,
which are not deducted to arrive at this amount. Investors should
view free cash flow as a supplement to, and not a substitute for,
GAAP measures of liquidity included in our condensed consolidated
statements of cash flows. The following table provides the
reconciliation of our net cash provided by operating activities to
FCF for the indicated periods:
Three months ended March 31, 2016
2015 in millions
Consolidated Liberty Global
Net cash provided by operating activities $ 1,088.9 $ 1,373.9
Excess tax benefits from share-based compensation6 1.8 20.0 Cash
payments for direct acquisition and disposition costs 8.2 7.6
Expenses financed by an intermediary7 153.5 9.1 Capital
expenditures (637.1 ) (661.2 ) Principal payments on amounts
financed by vendors and intermediaries (672.9 ) (381.7 ) Principal
payments on certain capital leases (27.4 ) (37.7 ) FCF $ (85.0 ) $
330.0
Liberty Global Group
Net cash provided by operating activities $ 1,019.0 $ 1,353.9
Excess tax benefits from share-based compensation 1.8 16.8 Cash
payments for direct acquisition and disposition costs 8.1 6.6
Expenses financed by an intermediary 153.5 9.1 Capital expenditures
(587.1 ) (611.4 ) Principal payments on amounts financed by vendors
and intermediaries (672.9 ) (381.7 ) Principal payments on certain
capital leases (27.3 ) (37.6 ) FCF $ (104.9 ) $ 355.7
LiLAC Group
Net cash provided by operating activities $ 69.9 $ 20.0 Excess tax
benefits from share-based compensation — 3.2 Cash payments for
direct acquisition and disposition costs 0.1 1.0 Capital
expenditures (50.0 ) (49.8 ) Principal payments on certain capital
leases (0.1 ) (0.1 ) FCF $ 19.9 $ (25.7 )
___________________________________________
6 Excess tax benefits from share-based compensation
represent the excess of tax deductions over the related financial
reporting share-based compensation expense. The hypothetical cash
flows associated with these excess tax benefits are reported as an
increase to cash flows from financing activities and a
corresponding decrease to cash flows from operating activities in
our condensed consolidated statements of cash flows. 7
For purposes of our condensed consolidated
statements of cash flows, expenses financed by an intermediary are
treated as hypothetical operating cash outflows and hypothetical
financing cash inflows when the expenses are incurred. When we pay
the financing intermediary, we record financing cash outflows in
our condensed consolidated statements of cash flows. For
purposes of our free cash flow definition, we add back the
hypothetical operating cash outflow when these financed expenses
are incurred and deduct the financing cash outflows when we pay the
financing intermediary.
ARPU per Customer Relationship8
The following table provides ARPU per customer relationship for
the indicated periods:
Three months ended March 31, %
FX-Neutral9 2016 2015
Change % Change Liberty Global Consolidated $ 43.74 $
44.30
(1.3)
%
2.6 % Liberty Global Group € 39.04 € 38.66 1.0 % 2.5 % U.K. &
Ireland (Virgin Media) £ 49.20 £ 48.35 1.8 % 1.5 % Germany
(Unitymedia) € 23.87 € 22.46 6.3 % 6.3 % Belgium (Telenet) € 52.34
€ 50.01 4.7 % 4.7 % The Netherlands (Ziggo) € 44.88 € 44.39 1.1 %
1.1 % Other Europe (UPC Holding) € 26.67 € 26.82
(0.6)
%
1.0 % LiLAC Group $ 54.36 $ 57.72
(5.8)
%
2.4 % Chile (VTR) CLP 33,049 CLP 32,210 2.6 % 2.6 % Puerto Rico $
77.40 $ 84.51
(8.4)
%
(8.4)
%
_________________________________________
8 The amounts for the three months ended March 31, 2015 do
not include the impact of the Choice acquisition.
Mobile Statistics
The following tables provide ARPU per mobile subscriber10 and
mobile subscribers11 for the indicated periods:
ARPU per Mobile Subscriber Three months ended
March 31, % FX-Neutral 2016
2015 Change % Change Liberty Global
Group: Including interconnect revenue $ 19.88 $ 22.34 (11.0 )% (6.9
)% Excluding interconnect revenue $ 16.23 $ 18.31 (11.4 )% (7.2 )%
LiLAC Group: Including interconnect revenue $ 24.77 $ 26.01
(4.8 )% 7.0 % Excluding interconnect revenue $ 22.40 $ 23.67 (5.4
)% 6.3 %
Mobile
Subscribers March 31, 2016 Dec. 31, 2015
Change Liberty Global Group: U.K. 2,997,400 3,016,400
(19,000 ) Belgium12 3,016,600 1,001,200 2,015,400 Germany 357,300
355,500 1,800 The Netherlands 197,000 186,800 10,200 Switzerland
40,700 32,900 7,800 Austria 17,400 13,000 4,400 Ireland 10,500
7,600 2,900 Total Western Europe 6,636,900
4,613,400 2,023,500 Hungary 41,300 34,400
6,900 Poland 6,700 7,200 (500 ) Total CEE 48,000
41,600 6,400 Liberty Global Group 6,684,900
4,655,000 2,029,900 LiLAC Group - Chile 132,000 132,000
— Grand Total 6,816,900 4,787,000
2,029,900
__________________________________________
9 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.
10 Our ARPU per mobile subscriber calculation that excludes
interconnect revenue refers to the average monthly mobile
subscription revenue per average mobile subscribers in service and
is calculated by dividing the average monthly mobile subscription
revenue (excluding activation fees, handset sales and late fees)
for the indicated period, by the average of the opening and closing
balances of mobile subscribers in service for the period. Our ARPU
per mobile subscriber calculation that includes interconnect
revenue increases the numerator in the above-described calculation
by the amount of mobile interconnect revenue during the period. 11
With the exception of the U.K., Belgium and Chile, all of our
mobile subscribers receive mobile services pursuant to postpaid
contracts. As of March 31, 2016 and December 31, 2015, the mobile
subscriber count in the U.K. included 693,100 and 755,800 prepaid
mobile subscribers, respectively, and the mobile subscriber count
in Belgium included 1,018,500 and none prepaid mobile subscribers,
respectively, and the mobile subscriber count in Chile included
9,900 and 10,900 prepaid mobile subscribers, respectively. 12 The
change in mobile subscribers in Belgium includes the addition of
1,997,600 subscribers from the acquisition of BASE, consisting of
1,022,300 prepaid subscribers and 975,300 postpaid subscribers.
RGUs, Customers and Bundling
The following table provides information on the breakdown of our
RGUs and customer base and highlights our customer bundling metrics
at March 31, 2016, December 31, 2015 and March 31, 2015: 13
March 31,2016
December 31,2015
March 31,2015
Q1’16 / Q4’15(% Change)
Q1’16 / Q1’15(% Change)
Liberty Global
Group
Total RGUs Video RGUs 22,580,300 22,733,400 22,921,200 (0.7
%) (1.5 %) Broadband Internet RGUs 16,945,500 16,798,300 16,255,600
0.9 % 4.2 % Telephony RGUs 14,118,400 13,997,600
13,551,500 0.9 % 4.2 % Total Liberty Global Group 53,644,200
53,529,300 52,728,300 0.2 % 1.7 %
Customers
Single-Play Customers 9,551,100 9,754,400 10,236,900 (2.1 %) (6.7
%) Dual-Play Customers 4,415,200 4,316,500 4,173,900 2.3 % 5.8 %
Triple-Play Customers 11,754,200 11,714,000
11,381,200 0.3 % 3.3 % Total Liberty Global Group 25,720,500
25,784,900 25,792,000 (0.2 %) (0.3 %) % of Single-Play
Customers 37.1 % 37.9 % 39.7 % (2.1 %) (6.5 %) % of Dual-Play
Customers 17.2 % 16.7 % 16.2 % 3.0 % 6.2 % % of Triple-Play
Customers 45.7 % 45.4 % 44.1 % 0.7 % 3.6 % RGUs per customer
relationship 2.09 2.08 2.04 0.5 % 2.5 %
LiLAC
Group
Total RGUs Video RGUs 1,293,400 1,289,900 1,228,800 0.3 %
5.3 % Broadband Internet RGUs 1,347,600 1,322,100 1,168,900 1.9 %
15.3 % Telephony RGUs 876,200 883,900 868,100
(0.9 %) 0.9 % Total LiLAC Group 3,517,200 3,495,900 3,265,800 0.6 %
7.7 %
Customers Single-Play Customers 570,000 562,300
485,100 1.4 % 17.5 % Dual-Play Customers 382,200 372,400 327,300
2.6 % 16.8 % Triple-Play Customers 727,600 729,600
708,700 (0.3 %) 2.7 % Total LiLAC Group 1,679,800 1,664,300
1,521,100 0.9 % 10.4 % % of Single-Play Customers 33.9 %
33.8 % 31.9 % 0.3 % 6.3 % % of Dual-Play Customers 22.8 % 22.4 %
21.5 % 1.8 % 6.0 % % of Triple-play Customers 43.3 % 43.8 % 46.6 %
(1.1 %) (7.1 %) RGUs per customer relationship 2.09 2.10
2.15 (0.5 %) (2.8 %)
_____________________________________________
13 The March 31, 2015 amounts do not include the impact of
the Choice acquisition.
Consolidated Operating Data — March 31,
2016
Video
HomesPassed(1)
Two-wayHomesPassed(2)
CustomerRelationships(3)
TotalRGUs(4)
Basic
VideoSubscribers(5)
EnhancedVideoSubscribers(6)
DTHSubscribers(7)
TotalVideo
InternetSubscribers(8)
TelephonySubscribers(9)
U.K. 12,978,000 12,960,800 5,170,100 12,842,400 — 3,719,800
— 3,719,800 4,765,300 4,357,300 Germany 12,783,000 12,600,800
7,137,100 12,542,300 4,949,700 1,509,000 — 6,458,700 3,146,200
2,937,400 The Netherlands(10) 7,036,700 7,022,800 4,046,500
9,688,300 736,500 3,307,900 — 4,044,400 3,108,900 2,535,000 Belgium
2,953,500 2,953,500 2,163,800 4,852,600 322,300 1,718,800 —
2,041,100 1,577,300 1,234,200 Switzerland(10) 2,197,400 2,196,900
1,314,400 2,516,900 601,000 668,000 — 1,269,000 747,100 500,800
Austria 1,375,100 1,375,100 651,200 1,382,400 133,100 362,300 —
495,400 488,400 398,600 Ireland 836,200 775,500 468,200 1,055,500
30,900 301,700 — 332,600 367,700 355,200 Total Western Europe
40,159,900 39,885,400 20,951,300 44,880,400 6,773,500 11,587,500 —
18,361,000 14,200,900 12,318,500 Poland 2,998,900 2,933,300
1,437,200 2,871,900 232,100 970,000 — 1,202,100 1,064,800 605,000
Hungary 1,644,900 1,627,400 1,102,500 2,095,500 158,900 493,700
293,200 945,800 598,800 550,900 Romania 2,684,000 2,622,600
1,245,100 2,150,700 282,200 606,700 345,600 1,234,500 500,600
415,600 Czech Republic 1,425,100 1,391,800 710,700 1,203,600
118,600 354,500 117,600 590,700 456,500 156,400 Slovakia 541,100
519,400 273,700 442,100 33,900 143,000 69,300 246,200 123,900
72,000 Total CEE 9,294,000 9,094,500 4,769,200 8,763,800 825,700
2,567,900 825,700 4,219,300 2,744,600 1,799,900
Total Liberty
Global Group 49,453,900 48,979,900
25,720,500 53,644,200 7,599,200
14,155,400 825,700 22,580,300
16,945,500 14,118,400 Chile 3,081,000
2,568,300 1,279,700 2,735,200 90,200 940,200 — 1,030,400 1,026,400
678,400 Puerto Rico 1,072,500 1,072,500 400,100 782,000 — 263,000 —
263,000 321,200 197,800
Total LiLAC Group 4,153,500
3,640,800 1,679,800 3,517,200 90,200
1,203,200 — 1,293,400 1,347,600
876,200 Grand Total 53,607,400
52,620,700 27,400,300 57,161,400
7,689,400 15,358,600 825,700 23,873,700
18,293,100 14,994,600
Subscriber Variance Table - March 31,
2016 vs. December 31, 2015
Video
HomesPassed(1)
Two-wayHomesPassed(2)
CustomerRelationships(3)
TotalRGUs(4)
Basic
VideoSubscribers(5)
EnhancedVideoSubscribers(6)
DTHSubscribers(7)
TotalVideo
InternetSubscribers(8)
TelephonySubscribers(9)
U.K. 69,500 69,500 54,900 110,000 — (7,200 ) — (7,200 )
70,400 46,800 Germany 19,200 44,300 (7,600 ) 23,600 (54,100 )
11,900 — (42,200 ) 40,000 25,800 The Netherlands(10) 13,500 13,700
(43,900 ) (39,900 ) (31,500 ) (12,600 ) — (44,100 ) 7,500 (3,300 )
Belgium 17,800 17,800 (13,700 ) 6,300 (18,300 ) 4,600 — (13,700 )
6,800 13,200 Switzerland(10) 2,300 2,300 (37,000 ) (50,300 )
(18,600 ) (14,700 ) — (33,300 ) (12,800 ) (4,200 ) Austria 2,800
2,800 (3,400 ) 3,800 (6,100 ) (1,000 ) — (7,100 ) 3,600 7,300
Ireland 1,900 3,500 (7,000 ) (17,100 ) (1,200 ) (9,500 ) —
(10,700 ) (3,500 ) (2,900 ) Total Western Europe 127,000 153,900
(57,700 ) 36,400 (129,800 ) (28,500 ) — (158,300 )
112,000 82,700 Poland 27,600 30,300 (4,400 ) 24,200
(8,600 ) 7,800 — (800 ) 12,400 12,600 Hungary 20,800 20,600 8,000
34,400 (11,200 ) 15,100 3,800 7,700 10,600 16,100 Romania 36,400
42,800 1,800 23,200 (8,400 ) 13,500 (5,000 ) 100 11,800 11,300
Czech Republic 3,300 3,300 (9,600 ) (3,000 ) 11,300 (6,900 ) (2,500
) 1,900 — (4,900 ) Slovakia 1,600 1,900 (2,500 ) (300 ) (2,600 )
(1,100 ) — (3,700 ) 400 3,000 Total CEE 89,700
98,900 (6,700 ) 78,500 (19,500 ) 28,400 (3,700 )
5,200 35,200 38,100 Total Liberty Global Group
216,700 252,800 (64,400 ) 114,900 (149,300 ) (100 ) (3,700 )
(153,100 ) 147,200 120,800 Chile 19,500 23,200
16,300 16,200 (3,600 ) 8,000 — 4,400 23,300 (11,500 ) Puerto Rico
1,800 1,800 (800 ) 5,100 — (900 ) — (900 )
2,200 3,800 Total LiLAC Group 21,300 25,000 15,500
21,300 (3,600 ) 7,100 — 3,500
25,500 (7,700 )
Grand Total 238,000
277,800 (48,900 ) 136,200
(152,900 ) 7,000 (3,700 )
(149,600 ) 172,700 113,100
Organic Change
Summary:
U.K. 69,500 69,500 54,900 110,000 — (7,200 ) — (7,200 ) 70,400
46,800 Germany 19,200 44,300 (7,600 ) 23,600 (54,100 ) 11,900 —
(42,200 ) 40,000 25,800 The Netherlands 13,500 13,700 (43,900 )
(39,900 ) (31,500 ) (12,600 ) — (44,100 ) 7,500 (3,300 ) Belgium
5,600 5,600 (13,700 ) 6,300 (18,300 ) 4,600 — (13,700 ) 6,800
13,200 Other Europe 80,300 91,100 (41,400 ) 34,600 (53,500 )
22,600 (3,700 ) (34,600 ) 28,000 41,200
Total Liberty Global Group 188,100 224,200
(51,700 ) 134,600 (157,400
) 19,300 (3,700 )
(141,800 ) 152,700 123,700
Chile 19,500 23,200 16,300 16,200 (3,600 ) 8,000 — 4,400
23,300 (11,500 ) Puerto Rico 1,800 1,800 (800 ) 5,100 —
(900 ) — (900 ) 2,200 3,800
Total
LiLAC Group 21,300 25,000 15,500
21,300 (3,600 ) 7,100
— 3,500 25,500
(7,700 ) Total Organic Change 209,400 249,200 (36,200
) 155,900 (161,000 ) 26,400 (3,700 ) (138,300 )
178,200 116,000
Q1 2016
Adjustments:
Q1 2016 Belgium adjustments 12,200 12,200 — — — — — — — —
Q1 2016
Switzerland adjustments
— — (23,700 ) (34,500 ) — (20,500 ) — (20,500 ) (10,600 ) (3,400 )
Q1 2016 Acquisitions
- Romania
16,400 16,400 9,900 12,600 7,800 300 — 8,100 4,500 —
Q1 2016 Acquisition
- Hungary
— — 1,100 2,200 300 800 — 1,100
600 500 Net Adjustments 28,600 28,600 (12,700
) (19,700 ) 8,100 (19,400 ) — (11,300 ) (5,500 )
(2,900 ) Net Adds (Reductions) 238,000 277,800 (48,900 )
136,200 (152,900 ) 7,000 (3,700 ) (149,600 ) 172,700
113,100
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. 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 and the Netherlands we do not report
homes passed for Switzerland’s and the Netherlands’ partner
networks. (2) Two-way Homes Passed are Homes Passed by those
sections of our networks that are technologically capable of
providing two-way services, including video, internet and telephony
services. (3) Customer Relationships are the number of customers
who receive at least one of our video, internet or telephony
services that we count as Revenue Generating Units (“RGUs”),
without regard to which or to how many services they subscribe. To
the extent that RGU counts include equivalent billing unit (“EBU”)
adjustments, we reflect corresponding adjustments to our Customer
Relationship counts. For further information regarding our EBU
calculation, see Additional General Notes to Tables. Customer
Relationships generally are counted on a unique premises basis.
Accordingly, if an individual receives our services in two premises
(e.g., a primary home and a vacation home), that individual
generally will count as two Customer Relationships. We exclude
mobile-only customers from Customer Relationships. (4) Revenue
Generating Unit or "RGU" is separately a Basic Video Subscriber,
Enhanced Video Subscriber, DTH Subscriber, 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, 2016 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 143,400
“lifeline” customers that are counted on a per connection basis,
representing the least expensive regulated tier of video cable
service, with only a few channels. (6) Enhanced Video Subscriber is
a home, residential multiple dwelling unit or commercial unit that
receives our video service over our broadband network or through a
partner network via a digital video signal while subscribing to any
recurring monthly service that requires the use of
encryption-enabling technology. Enhanced Video Subscribers that are
not counted on an EBU basis are counted on a unique premises basis.
For example, a subscriber with one or more set-top boxes that
receives our video service in one premises is generally counted as
just one subscriber. An Enhanced Video Subscriber is not counted as
a Basic Video Subscriber. As we migrate customers from basic to
enhanced video services, we report a decrease in our Basic Video
Subscribers equal to the increase in our Enhanced Video
Subscribers. Subscribers to enhanced video services provided by our
operations in Switzerland and the Netherlands over partner networks
receive basic video services from the partner networks as opposed
to our operations. (7) DTH Subscriber is a home, residential
multiple dwelling unit or commercial unit that receives our video
programming broadcast directly via a geosynchronous satellite. (8)
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 51,100 digital subscriber line (“DSL”)
subscribers within Austria that are not serviced over our networks.
Our Internet Subscribers do not include customers that receive
services from dial-up connections. In Switzerland, we offer a 2
Mbps internet service to our Basic and Enhanced Video Subscribers
without an incremental recurring fee. Our Internet Subscribers in
Switzerland include 100,400 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 39,500 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 61,200 subscribers
who have requested and received this service. (10) Pursuant to
service agreements, Switzerland and, to a much lesser extent, the
Netherlands offer enhanced video, broadband internet and telephony
services over networks owned by third-party cable operators
(“partner networks”). A partner network RGU is only recognized if
there is a direct billing relationship with the customer. At March
31, 2016, Switzerland’s partner networks account for 139,200
Customer Relationships, 285,600 RGUs, 105,400 Enhanced Video
Subscribers, 106,700 Internet Subscribers, and 73,500 Telephony
Subscribers.
Additional General Notes to
Tables:
As a result of our decision to discontinue our Multi-channel
Multipoint Distribution System (“MMDS”) service in Ireland, we have
excluded subscribers to our MMDS service from our externally
reported operating statistics effective January 1, 2016, which
resulted in a reduction to Homes Passed, RGUs, and Customer
Relationships in Ireland and Slovakia of 22,200 and 500,
respectively.
Most of our broadband communications subsidiaries provide
telephony, broadband internet, data, video or other B2B services.
Certain of our B2B revenue is derived from small or home office
(“SOHO”) subscribers that pay a premium price to receive enhanced
service levels along with video, internet or telephony services
that are the same or similar to the mass marketed products offered
to our residential subscribers. All mass marketed products provided
to SOHOs, whether or not accompanied by enhanced service levels
and/or premium prices, are included in the respective RGU and
customer counts of our broadband communications operations, with
only those services provided at premium prices considered to be
“SOHO RGUs” or “SOHO customers.” With the exception of our B2B SOHO
subscribers, we generally do not count customers of B2B services as
customers or RGUs for external reporting purposes.
Certain of our residential and commercial RGUs are counted on an
EBU basis, including residential multiple dwelling units and
commercial establishments such as bars, hotels and hospitals in
Chile and Puerto Rico and certain commercial and residential
multiple dwelling units in Europe (with the exception of Germany
and Belgium, where we do not count any RGUs on an EBU
basis). Our EBUs are generally calculated by dividing the bulk
price charged to accounts in an area by the most prevalent price
charged to non-bulk residential customers in that market for the
comparable tier of service. As such, we may experience variances in
our EBU counts solely as a result of changes in rates. In Germany,
homes passed reflect the footprint and two-way homes passed reflect
the technological capability of our network up to the street
cabinet, with drops from the street cabinet to the building
generally added, and in-home wiring generally upgraded, on an as
needed or success-based basis. In Belgium, Telenet leases a portion
of its network under a long-term capital lease arrangement. These
tables include operating statistics for Telenet's owned and leased
networks.
While we take appropriate steps to ensure that subscriber
statistics are presented on a consistent and accurate basis at any
given balance sheet date, the variability from country to country
in (i) the nature and pricing of products and services, (ii) the
distribution platform, (iii) billing systems, (iv) bad debt
collection experience and (v) other factors add complexity to the
subscriber counting process. We periodically review our subscriber
counting policies and underlying systems to improve the accuracy
and consistency of the data reported on a prospective basis.
Accordingly, we may from time to time make appropriate adjustments
to our subscriber statistics based on those reviews.
Subscriber information for acquired entities is preliminary and
subject to adjustment until we have completed our review of such
information and determined that it is presented in accordance with
our policies.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160509006618/en/
Liberty GlobalInvestor
Relations:Oskar Nooij, +1 303 220 4218Christian
Fangmann, +49 221 84 62 5151John Rea, +1 303 220 4238orCorporate Communications:Matt Beake, +44 20
8483 6428Aimee Baxter, +1 646 561 3512
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