Rebased Revenue Growth of 3% to $4.5 billion
Project Lightning Ready to Ramp in the U.K.
Repurchased ~$500 Million of Equity in Q1'15
Full-Year 2015 Guidance Targets Confirmed
Liberty Global plc ("Liberty Global" or the "Company") (NASDAQ:
LBTYA, LBTYB and LBTYK), today announces financial and operating
results1 for the three months ended March 31, 2015 ("Q1").
Operating and financial highlights:
- Continued focus on high-value bundles
offering superior broadband speeds, next-generation TV
functionality, enhanced content and mobility
- Over 150,000 broadband additions and
record quarter for Horizon TV growth in Q1
- Customer ARPU2 increased 5%3
year-over-year on an FX-neutral basis
- Organic RGU4 additions of 68,000 in Q1,
principally impacted by higher video losses
- Underperformance in Germany, the
Netherlands and Ireland drove majority of variance
- April RGU additions were back on track,
with net adds running well ahead of April 2014
- Despite slow Q1, targeting over one
million organic subscriber additions in 2015
- Revenue of $4.5 billion, reflecting
rebased5 growth of 3%, up from 2% in Q1'14
- Q1 price increases in 12 markets lay
foundation for balanced growth in 2015
- Improved year-over-year rebased revenue
growth in 5 of 7 Western European markets
- Continued strong rebased revenue growth
for mobile and B2B
- Operating Cash Flow6 of $2.1 billion,
representing 1% rebased growth
- Growth negatively impacted by favorable
nonrecurring items in Q1 2014
- Operating income of $558 million, a
decrease of 4% year-over-year
- Free Cash Flow ("FCF")7 of $330
million, flat compared to $336 million in Q1 2014
- Favorable capital market conditions
improved already strong balance sheet
- Refinanced ~$6.5 billion in Q1 lowering
fully-swapped borrowing cost to 5.4%
- Extended average tenor to nearly eight
years, with over 90% due after 2019
- LiLAC tracking stock set to launch in
early July
CEO Mike Fries stated, "Although our Q1 subscriber additions
were impacted by higher video losses due to increased competition
in certain markets and other factors, consumer appetite for our
next-generation services remained strong with 150,000 new broadband
subscribers and record Horizon TV additions. Price increases across
our footprint contributed to a 5% ARPU increase and provide a
foundation for further growth in 2015. We remain in a strong
competitive position with our market leading broadband speeds and
our advanced video platforms, and expect to add over one million
net new RGUs this year.”
"We continue to make steady progress with the integration of
Ziggo in the Netherlands with a substantial increase to broadband
speeds and the introduction of Horizon TV across the former Ziggo
footprint. We did, however, experience lower sales and higher churn
in the former Ziggo footprint due in part to our network and
product harmonization in March. In the U.K., we are seeing early
success from Project Lightning before network construction kicks
off in earnest during the second half of this year. We continue to
see excellent traction in our trial areas as penetration is in-line
with and ARPU is ahead of expectations."
"Our revenue performance of 3% rebased growth reflected steady
growth in our core triple-play business and even faster growth in
mobile and B2B. Rebased OCF growth of 1% was impacted by a
difficult comparison to Q1'14, but was consistent with our phasing
expectations. We remain confident in our ability to achieve all of
our guidance targets for 2015, including mid-single digit rebased
OCF growth and $2.5 billion of Free Cash Flow, which would
represent mid-teens growth on an FX-Adjusted8 basis."
"On the M&A front, our subsidiary Telenet recently announced
the pending acquisition of mobile operator BASE, which will secure
long-term access to mobile capacity in Belgium. This transaction
will be financed entirely off of Telenet’s balance sheet and offers
substantial synergies, resulting in a very attractive
synergy-adjusted multiple of 4.2x9. Elsewhere in Europe, we are
excited about the significant progress with our wireless strategy,
including preparations for a number of 4G launches via MVNO’s in
2015 and the continued expansion of our WiFi network. We expect
these developments to have the combined benefit of driving growth
and reducing churn."
"During Q1, we remained very active in the capital markets with
$6.5 billion of debt refinancings, taking advantage of favorable
conditions to lengthen our maturity profile, further reduce our
cost of debt and more closely align our regional credit pools. We
also repurchased nearly $500 million of our stock during the first
three months of the year, leaving $3.5 billion of shares to
repurchase over the next seven quarters. Finally, following
shareholder approval in late February, we are pleased to announce
that we expect our LiLAC tracking stock to begin trading in early
July, creating greater choice for our shareholders."
Subscriber Statistics
At March 31, 2015, we provided a total of 56.0 million
subscription services ("RGUs") to the 27.3 million unique customers
across our cable footprint of 52.1 million homes passed. These
services consisted of 24.2 million video, 17.4 million broadband
internet and 14.4 million telephony subscriptions. During the first
quarter of 2015, we increased our RGUs by 80,000, primarily driven
by 68,000 organic RGU additions. We ended the quarter with a
bundling ratio of 2.05 RGUs per customer and a total of 16.6
million bundled customers, or 61% of our total customer base.
During the past several quarters, we made substantial
investments in product development and our superior network to
deliver innovative products and services, including superfast
broadband, Horizon TV, Horizon Go, WiFi and MyPrime, that
differentiate us from our competitors. These and other improvements
underpinned our price increases, which were implemented in 12 of
our markets in Q1 2015, and contributed to our Q1 FX-neutral
customer ARPU increase of 5% year-over-year. The increases were
implemented successfully in markets such as the U.K. and
Belgium.
During Q1, we experienced lower sales and elevated churn as
explained below, which tempered our Q1 2015 organic RGU additions
to 68,000 as compared to 345,000 RGU additions in Q1 2014. As we
look forward, we are confident that our compelling and innovative
products will gain further traction, and expect a significant
increase in the average level of quarterly organic RGU additions
for the rest of the year.
From a regional standpoint, our Q1 organic additions consisted
of 19,000 RGU additions in Western Europe, 14,000 in Central and
Eastern Europe ("CEE") and 36,000 in Latin America11. The main
negative variances against prior year net additions were in
Germany, the Netherlands and Ireland. In Germany, the 29,000 RGU
additions were tempered as compared to 127,000 in Q1 2014, partly
due to the 10% price increase for 1.3 million of our legacy
broadband subscribers and approximately 20,000 incremental RGU
losses related to housing association contract ("MDU")
disconnections. In the Netherlands, the landscape remains
competitive and in the former Ziggo footprint we experienced lower
sales and higher churn associated with the network and product
harmonization that we completed in March, which contributed to a
total net loss of 47,000 RGUs during the quarter, of which 43,000
RGU losses occurred in the former Ziggo footprint. In April, we
launched unified marketing campaigns promoting our new high-value
Ziggo portfolio, which centers around Horizon TV and our superior
speeds. Our 9,000 RGU loss in Ireland was due in part to increased
competition. Rounding out our top five Western European markets,
our U.K., Belgian and Swiss operations added 23,000, 14,000 and
11,000 organic RGUs, respectively. In Latin America, we reported
26,000 net additions in Chile, driven by our best result in
broadband internet in almost three years, and 10,000 net additions
in Puerto Rico.
On a product level, broadband internet remained the key driver
of our organic subscriber additions as our speed superiority
allowed us to add 154,000 RGUs in Q1 2015. The year-over-year
decrease in broadband internet additions of 85,000 was mainly
attributable to a 47,000 decrease in broadband internet net
additions in Germany, due largely to the impact of the
aforementioned price increase. Of note, our Dutch operation added
10,000 broadband RGUs despite the highly competitive environment.
With respect to fixed-line telephony, we added 83,000 RGUs, down
from 177,000 RGU additions in Q1 2014, mainly driven by lower
additions in Germany and CEE.
During Q1, our next-generation video platforms continued to gain
traction as we added 274,000 subscribers, including a record
171,000 for Horizon TV. This performance was led by 80,000 net
additions in Germany, its best quarterly performance ever. In
April, the Horizon TV platform became available in the former Ziggo
footprint, allowing all Dutch consumers the opportunity to
experience our advanced entertainment platform, and was introduced
in the Czech Republic as well. In addition to our Horizon
subscribers, we have 2.6 million TiVo subscribers in the U.K.,
where we added over 100,000 TiVo subscribers in Q1. In terms of our
video performance, we lost 169,000 video subscribers in Q1 2015,
which was 98,000 RGUs more than the video subscriber attrition in
Q1 2014. The higher video churn was driven by the underperformance
in the former Ziggo footprint, while the German increase was partly
related to the MDU disconnections mentioned above. The weaker Swiss
performance was due to a difficult comparison, as Q1 2014 was
positively impacted by the introduction of digital products in the
Geneva region.
This quarter we have modified our video subscriber definitions
to better align these definitions with the underlying services
received by our subscribers. Because most of our customers now have
access to our basic unencrypted digital signal as part of their
video subscription, we have replaced our "analog cable" and
"digital cable" subscriber definitions with "basic video" and
"enhanced video", respectively. We ended the quarter with 15.1
million enhanced video subscribers, representing enhanced video
penetration12 of 65%, and 8.3 million basic video subscribers,
which provides a sizeable runway for further upsell.
In addition to our triple-play business, we finished Q1 2015
with 4.6 million mobile subscribers13, an increase of 41,000 during
the quarter. This growth was led by an increase of 30,000 mobile
subscribers in Belgium, while the Netherlands, Germany, Chile and
Switzerland added 29,000, 13,000, 7,000 and 6,000, respectively.
Although Virgin Media added 19,000 postpaid subscribers, the
decline in the prepaid base resulted in a Q1 2015 net loss of
46,000 mobile subscribers. In the first quarter of 2015, we added a
total of 113,000 postpaid subscribers and, as a result, continued
to improve our mobile subscriber mix to a postpaid share of 80% of
our total mobile subscribers, up from 74% at Q1 2014.
Revenue
Our revenue of $4.5 billion for the three months ended March 31,
2015 was flat as compared to the corresponding prior year period.
The reported result was positively impacted by the inclusion of
Ziggo and our organic revenue growth, fully offset by negative
foreign currency ("FX") movements related to the strengthening of
the U.S. dollar against all of our currencies. When adjusting for
acquisitions, dispositions and FX, we achieved year-over-year
rebased revenue growth of 3% during Q1 2015, an improvement from
the 2% rebased revenue result we delivered in Q1 2014.
This rebased improvement was primarily driven by growth in
revenue from residential broadband internet services. Increased
revenue from mobile (including interconnect and handset sales) and
B2B14 (including SOHO) were also strong contributors, delivering
16%15 and 6% growth, respectively, on a rebased basis. The positive
impacts of these factors were partially offset by the net negative
effect of certain items, the most significant of which were: (i)
the $37 million negative impact of increased VAT obligations,
including $33 million in the U.K., (ii) the $18 million net
positive impact from the upfront recognition of revenue in
connection with our Freestyle Mobile promotion in the U.K.16 and
(iii) the $12 million negative impact of a favorable revenue
settlement in Germany during Q1 2014.
Geographically, we delivered 3% rebased revenue growth in
Europe, consisting of 3% and 1% in Western Europe and CEE,
respectively, both of which were improvements versus the prior year
period. In Western Europe, which represents over 85% of our
consolidated revenue, we improved our year-over-year rebased
revenue growth in five of seven countries. In Latin America, our
Chilean operation generated 5% rebased revenue growth, in-line with
Q1 2014, while our Puerto Rican operation posted 6% rebased revenue
growth, its best quarterly performance since Q2 2012.
Turning back to Western Europe, our performance was led by our
operation in Belgium, which delivered 7% rebased revenue growth,
primarily driven by growth in subscribers, higher ARPU and an
increase in mobile subscription revenue. Germany and Switzerland
each posted 5% rebased revenue growth, due primarily to increases
in cable subscription revenue that were driven by higher ARPU,
growth in subscribers and, in Switzerland, B2B success. Germany's
increase was partially offset by the aforementioned unfavorable
impact of a nonrecurring network settlement in Q1 2014. Rounding
out our top five markets, Virgin Media delivered 3% rebased revenue
growth, an improvement over the 1% rebased result in Q1 2014,
mainly driven by subscriber growth and the net negative impact of
the VAT and Freestyle Mobile items mentioned above. Meanwhile, our
Dutch operation posted 1% rebased revenue growth, primarily
attributable to higher cable subscription ARPU and mobile
volume.
Operating Cash Flow
Our reported Q1 2015 OCF decreased 1% to $2.1 billion, as
compared to the corresponding prior year period, and was driven by
the aforementioned contributors to our reported top-line results.
From a rebased growth perspective, which adjusts for the impact of
acquisitions, dispositions and FX, we reported a 1% increase for
the three months ended March 31, 2015. This growth reflects a tough
comparative period, as our Q1 2014 results benefited from the
favorable net impact of nonrecurring items to a much greater extent
than our Q1 2015 results did. As disclosed in our Q1 2014 release,
the most significant of the nonrecurring items that were included
in our Q1 2014 results included the impact of accrual releases
related to the settlement of operational contingencies of $17
million in Belgium and $7 million in Poland and the aforementioned
favorable revenue settlement in Germany.
From a regional standpoint, Western Europe delivered 3% rebased
OCF growth, while CEE experienced a 9% rebased contraction. CEE was
negatively affected by the $7 million accrual release in Poland
mentioned above and a $4 million increase in recurring VAT payments
related to our Luxembourg-based DTH operation that took effect on
January 1, 2015. Outside Europe, our Puerto Rican business reported
14% rebased OCF growth, primarily driven by solid revenue growth
and continued cost controls, while Chile delivered 4% rebased OCF
growth in Q1 2015.
Looking at our five largest markets, our Q1 rebased growth was
led by U.K./Ireland, which grew rebased OCF by 7%, primarily due to
the aforementioned revenue drivers, cost controls and the delivery
of substantially all of the expected OCF synergies as a result of
reorganization and integration activities following the acquisition
of Virgin Media. In each of Switzerland/Austria and Germany, we
reported 3% rebased OCF growth, with the latter being impacted by
the aforementioned $12 million nonrecurring item in Q1 2014. In
Belgium, our rebased OCF growth was flat in Q1, as the Q1'14
favorable nonrecurring item mentioned above presented a difficult
comparison. Lastly, in the Netherlands, our rebased OCF declined 4%
due in part to $15 million of expenses associated with rebranding
and network and product harmonization efforts.
From an OCF margin17 perspective, our consolidated margin
declined slightly from 46.9% in Q1 2014 to 46.4% in Q1 2015. Of
particular note, our U.K./Ireland OCF margin improved by 175 basis
points, partly driven by the realization of synergies.
Operating Income
For the three months ended March 31, 2015, our operating income
decreased 4% to $558 million, as compared to $582 million during
the corresponding prior year period. This decrease is largely due
to the negative impact of a strengthening U.S. dollar and higher
depreciation and amortization expense that more than offset a
decline in impairment, restructuring and other operating items and
the impact of organic OCF growth. The increase in depreciation and
amortization expense is primarily attributable to the acquisition
of Ziggo.
Net Loss Attributable to Shareholders
We reported a net loss attributable to shareholders (“Net Loss”)
of $538 million or $0.61 per basic and diluted share for the three
months ended March 31, 2015. This compares to a Net Loss of $79
million or $0.10 per basic and diluted share for the corresponding
prior year period. The increase in our Net Loss during Q1 2015 is
primarily due to the impact of the $340 million gain on the sale of
our Chellomedia that we recognized in Q1 2014. In addition, our Net
Loss was impacted by the impacts of a higher loss on debt
modification and extinguishment and the net negative impact of a
strengthening U.S. dollar on our derivative and FX results.
At April 30, 2015, we had 882 million shares outstanding,
including 252 million Class A ordinary shares, 11 million Class B
ordinary shares and 619 million Class C ordinary shares.
Property and Equipment Additions
During the first quarter of 2015, we reported $925 million of
property and equipment ("P&E") additions18 or 20.5% of revenue
as compared to $910 million or 20.1% of revenue in Q1 2014. The
increase in absolute P&E additions was primarily related to the
net impacts of an increase in support capital, an increase due to
the inclusion of Ziggo during the 2015 period, a decrease due to
the strengthening of the U.S. dollar and lower overall spend on
CPE. The increase in support capital was due in part to costs
associated with Virgin Media's new mobile billing system. In terms
of allocation, 49% of our Q1 capital spend was related to CPE and
scalable infrastructure, 25% to line extensions and upgrade/rebuild
activity, and 27% to support capital, including IT upgrades and
general support systems.
Free Cash Flow
For the three months ended March 31, 2015, we generated FCF of
$330 million, which is comparable to the $336 million of FCF we
generated in the prior year period. This result is a function of
increases associated with the inclusion of Ziggo in Q1 2015 and
lower capital expenditures and decreases associated with higher
cash taxes, primarily at Telenet, and the strengthening of the U.S.
dollar against all of our currencies.
Leverage & Liquidity
We had total debt19 of $44.1 billion and cash and cash
equivalents of $630 million at March 31, 2015. As compared to
year-end 2014, our reported debt and cash positions decreased by
$2.1 billion and $528 million, respectively. The decrease in our
total debt during the first quarter was primarily the result of
depreciation of the majority of our borrowing currencies against
the U.S. dollar, offset by approximately $615 million of net
additional combined borrowings.
After excluding $1.4 billion of debt backed by shares we hold in
Sumitomo Corporation and ITV plc, we ended Q1 2015 with
consolidated adjusted gross and net leverage ratios20 of 4.9x and
4.8x, respectively. Our fully-swapped debt borrowing cost21
declined from 6.0% at Q4 2014 to 5.4% at March 31, 2015, mainly as
a result of approximately $6.5 billion of refinancing activity
during the quarter. This refinancing activity included debt raised
at Virgin Media in order to fund the transfer of a controlling
interest in UPC Broadband Ireland Ltd. from the UPC credit pool to
the Virgin Media credit pool and debt raised at Ziggo in order to
fund the transfer of UPC Nederland B.V. from the UPC credit pool to
the Ziggo credit pool. In addition, we completed various
refinancing transactions at Unitymedia and Virgin Media. Our
average tenor is now nearly eight years with less than 10% of our
debt due before 2020.
With respect to our consolidated liquidity22 position, we
finished Q1 with approximately $4.3 billion, including $630 million
of cash as noted above and aggregate borrowing capacity of $3.7
billion, as represented by the maximum undrawn commitments under
each of our credit facilities.23
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including statements regarding our strategies, future growth
prospects and opportunities; OCF and FCF; subscriber and RGU
growth, including our expectations for organic subscriber additions
in 2015; the development and expansion of our superior network and
innovative products and services, including superfast broadband,
Horizon TV, Horizon Go, WiFi and MyPrime; increased upselling; our
mobile and wireless strategy, including anticipated 4G launches and
expansion of our WiFi network; our share repurchase program; the
strength of our balance sheet and tenor of our third-party debt;
our expectations with respect to Project Lightning and Telenet’s
proposed acquisition of BASE; the anticipated commencement of
trading of the LiLAC tracking shares and other information and
statements that are not historical fact. These forward-looking
statements involve certain risks and uncertainties that could cause
actual results to differ materially from those expressed or implied
by these statements. These risks and uncertainties include the
continued use by subscribers and potential subscribers of our
services and their willingness to upgrade to our more advanced
offerings, our ability to meet challenges from competition, to
manage rapid technological change or to maintain or increase rates
to our subscribers or to pass through increased costs to our
subscribers, the effects of changes in laws or regulation, general
economic factors, our ability to obtain regulatory approval and
satisfy regulatory conditions associated with acquisitions and
dispositions, our ability to successfully acquire and integrate new
businesses and realize anticipated efficiencies from businesses we
acquire, the availability of attractive programming for our digital
video services and the costs associated with such programming, our
ability to achieve forecasted financial and operating targets, the
outcome of any pending or threatened litigation, our ability to
access cash of our subsidiaries and the impact of our future
financial performance, or market conditions generally, on the
availability, terms and deployment of capital, fluctuations in
currency exchange and interest rates, the ability of vendors and
suppliers to timely deliver quality products, equipment, software
and services, as well as other factors detailed from time to time
in our filings with the Securities and Exchange Commission,
including the most recently filed Forms 10-K and 10-Q. These
forward-looking statements speak only as of the date of this
release. We expressly disclaim any obligation or undertaking to
disseminate any updates or revisions to any forward-looking
statement contained herein to reflect any change in our
expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is
based.
About Liberty Global
Liberty Global is the largest international cable company with
operations in 14 countries. We connect people to the digital world
and enable them to discover and experience its endless
possibilities. Our market-leading products are provided through
next-generation networks and innovative technology platforms that
connected 27 million customers subscribing to 56 million
television, broadband internet and telephony services at March 31,
2015. In addition, we served five million mobile subscribers and
offered WiFi access across over five million access points.
Liberty Global's consumer brands are Virgin Media, Ziggo,
Unitymedia, Telenet, UPC, VTR and Liberty Cablevision. Our
operations also include Liberty Global Business Services and
Liberty Global Ventures.
_______________________________________
1 We sold substantially all of our legacy content business
on January 31, 2014 (the "Chellomedia Sale"). Accordingly, we have
presented the disposed business as a discontinued operation for the
Q1 2014 period. 2 Average Revenue Per Unit (“ARPU”) refers to the
average monthly subscription revenue per average customer
relationship and is calculated by dividing the average monthly
subscription revenue (excluding mobile services, B2B services,
interconnect, channel carriage fees, mobile handset sales and
installation fees) for the indicated period, by the average of the
opening and closing balances for customer relationships for the
period. Customer relationships of entities acquired during the
period are normalized. Unless otherwise indicated, ARPU per
customer relationship for the Liberty Global Consolidated, the
European Operations Division and Other Europe are not adjusted for
currency impacts. All ARPU amounts for Q1'14 exclude Ziggo. 3 The
FX-neutral change in ARPU 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.
Liberty Global's consolidated ARPU and the Netherlands' ARPU for
Q1'15 include Ziggo, while the corresponding amounts for Q1'14 do
not. If Ziggo were excluded from the Q1'15 ARPU calculation, the
year-over-year increase in ARPU on an FX neutral basis would
decline to 3.3%. 4
Please see page 22 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.
5
Please see page 13 for information on
rebased growth.
6
Please see page 15 for our OCF definition
and the required reconciliation.
7
Please see page 17 for information on Free
Cash Flow (“FCF”) and the required reconciliations.
8
The 2015 mid-teens growth guidance for the
Free Cash Flow on an FX-adjusted basis is based on the reported
2014 Free Cash Flow plus the 2014 pre-acquisition Free Cash Flow of
Ziggo, with the combined amount further adjusted to reflect the new
Ziggo capital structure, current foreign exchanges rates and any
changes to our FCF definition.
9
For purposes of the multiple calculation,
we use Telenet management’s estimate of BASE Company’s FY 2015
EBITDA of €165 million, as adjusted by Telenet to exclude BASE
Company’s discontinued operations and estimated reorganization
costs and to include estimated annual run-rate opex savings of €145
million based on Telenet management’s assumptions, including
estimated annual run-rate savings on FY 2017 MVNO-related expenses
and other estimated annual run-rate opex savings to be achieved by
FY 2019. This multiple does not adjust the Enterprise Value to
include approximately €240 million of projected one-off investments
and integration costs. When the Enterprise Value is adjusted to
include approximately €240 million of projected one-off investments
and integration costs, the synergy adjusted multiple increases to
5.0x. The Adjusted EBITDA figure is based on International
Financial Reporting Standards, as adopted by the European Union
(“EU-IFRS”).
10
Telephony and broadband penetration is
calculated by dividing the number of telephony RGUs and broadband
RGUs, respectively, by the total two-way homes passed.
11
Latin America includes our broadband
communications operations in both Chile and Puerto Rico.
12
Enhanced video penetration is calculated
by dividing the number of enhanced video RGUs by the total number
of video RGUs.
13 Our mobile subscriber count represents the number of active
subscriber identification module (“SIM”) cards in service rather
than services provided. For example, if a mobile subscriber has
both a data and voice plan on a smartphone this would equate to one
mobile subscriber. Alternatively, a subscriber who has a voice and
data plan for a mobile handset and a data plan for a laptop (via a
dongle) would be counted as two mobile subscribers. Customers who
do not pay a recurring monthly fee are excluded from our mobile
telephony subscriber counts after periods of inactivity ranging
from 30 to 90 days, based on industry standards within the
respective country. 14 Total B2B includes subscription (SOHO) and
non-subscription revenue. Non-subscription revenue includes the
amortization of deferred upfront installation fees and deferred
nonrecurring 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 B2B revenue
is accounting for $7 million of the rebased increase from Q1 2014
to Q1 2015 in our total B2B revenue. 15 Our 16% rebased mobile
revenue growth includes the positive impact of our Freestyle Mobile
promotion in the U.K., as further described in footnote 16.
Excluding the impact of mobile handset revenue (which includes a
$21 million benefit from our Freestyle Mobile promotion in Q1
2015), our rebased mobile revenue growth would have been 7%. 16
Under Freestyle contractual arrangements, we generally recognize
the full sales price for the mobile handset upon delivery as a
component of other revenue, regardless of whether the sales price
is received upfront or in installments. Revenue associated with the
airtime services is recognized as mobile subscription revenue over
the contractual term of the airtime services contract. Prior to the
launch of Freestyle contracts in November 2014, handsets were
generally provided to customers on a subsidized basis. As a result,
revenue associated with the handset was only recognized upfront to
the extent of cash collected at the time of sale, and the monthly
amounts collected for both the handset and airtime were included in
mobile subscription revenue over the term of the contract. Handset
costs associated with Freestyle handset revenue are expensed at the
point of sale. 17 OCF margin is calculated by dividing OCF by total
revenue for the applicable period. 18 Our property and equipment
additions include our capital expenditures on an accrual basis and
amounts financed under vendor financing or capital lease
arrangements. 19 Total debt includes capital lease obligations. 20
Our 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 excludes the loans backed by the shares we hold
in Sumitomo Corp. and ITV plc and is measured using swapped foreign
currency rates, consistent with the covenant calculation
requirements of our subsidiary debt agreements. 21 Our
fully-swapped debt borrowing cost represents the weighted average
interest rate on our aggregate variable- and fixed-rate
indebtedness (excluding capital lease obligations), including the
effects of derivative instruments, original issue premiums or
discounts and commitment fees, but excluding the impact of
financing costs. 22
Consolidated liquidity refers to our
consolidated cash and cash equivalents plus the maximum undrawn
commitments under our subsidiaries' borrowing facilities without
regard to covenant compliance calculations.
23 Our aggregate unused borrowing capacity of $3.7 billion
represents the maximum undrawn commitments under our subsidiaries'
applicable facilities without regard to covenant compliance
calculations. Upon completion of the relevant March 31, 2015
compliance reporting requirements for our credit facilities, and
assuming no further changes from quarter-end borrowing levels, we
anticipate that our subsidiaries' borrowing capacity would be $3.2
billion.
Liberty Global plcCondensed
Consolidated Balance Sheets (unaudited)
March 31, 2015
December 31, 2014
in millions ASSETS Current assets: Cash and cash
equivalents $ 630.4 $ 1,158.5 Trade receivables, net 1,307.8
1,499.5 Derivative instruments 230.9 446.6 Deferred income taxes
304.4 290.3 Prepaid expenses 224.8 189.7 Other current assets 263.2
335.9 Total current assets 2,961.5 3,920.5
Investments 2,032.9 1,808.2 Property and equipment, net 21,821.9
23,840.6 Goodwill 26,930.1 29,001.6 Intangible assets subject to
amortization, net 7,917.5 9,189.8 Other assets, net 6,016.9
5,081.2 Total assets $ 67,680.8 $ 72,841.9
LIABILITIES AND EQUITY Current liabilities:
Accounts payable $ 1,072.4 $ 1,039.0 Deferred revenue and advance
payments from subscribers and others 1,479.9 1,452.2 Current
portion of debt and capital lease obligations 1,292.8 1,550.9
Accrued interest 578.6 690.6 Derivative instruments 390.8 1,043.7
Other accrued and current liabilities 3,028.4 3,413.9
Total current liabilities 7,842.9 9,190.3 Long-term debt and
capital lease obligations 42,790.5 44,608.1 Other long-term
liabilities 4,671.1 4,927.5 Total liabilities
55,304.5 58,725.9 Commitments and
contingencies Equity: Total Liberty Global shareholders
12,954.6 14,714.5 Noncontrolling interests (578.3 ) (598.5 ) Total
equity 12,376.3 14,116.0 Total liabilities and
equity $ 67,680.8 $ 72,841.9
Liberty Global plcCondensed
Consolidated Statements of Operations (unaudited)
Three months ended March 31,
2015 2014
in millions, except pershare
amounts
Revenue $ 4,516.9 $ 4,533.7
Operating costs and expenses: Operating (other than depreciation
and amortization) (including share-based compensation) 1,685.9
1,698.8 Selling, general and administrative (SG&A) (including
share-based compensation) 805.1 762.5 Depreciation and amortization
1,451.4 1,377.1 Impairment, restructuring and other operating
items, net 17.0 113.6 3,959.4 3,952.0
Operating income 557.5 581.7 Non-operating
income (expense): Interest expense (615.9 ) (653.5 ) Realized and
unrealized gains (losses) on derivative instruments, net 618.5
(376.6 ) Foreign currency transaction losses, net (1,035.6 ) (20.8
) Realized and unrealized gains (losses) due to changes in fair
values of certain investments, net 151.4 (60.2 ) Losses on debt
modification and extinguishment, net (274.5 ) (20.9 ) Other income
(expense), net (1.0 ) 13.3 (1,157.1 ) (1,118.7 ) Loss from
continuing operations before income taxes (599.6 ) (537.0 ) Income
tax benefit 77.9 117.0 Loss from continuing
operations (521.7 ) (420.0 ) Discontinued operation: Earnings from
discontinued operation, net of taxes — 0.8 Gain on disposal of
discontinued operation, net of taxes — 339.9 —
340.7 Net loss (521.7 ) (79.3 ) Net loss (earnings)
attributable to noncontrolling interests (15.8 ) 0.5 Net
loss attributable to Liberty Global shareholders $ (537.5 ) $ (78.8
) Basic and diluted earnings (loss) attributable to Liberty
Global shareholders per share: Continuing operations $ (0.61 ) $
(0.53 ) Discontinued operation — 0.43 $ (0.61 ) $
(0.10 )
Liberty Global plcCondensed
Consolidated Statements of Cash Flows (unaudited)
Three Months Ended March 31, 2015
2014 in millions Cash flows from
operating activities: Net loss $ (521.7 ) $ (79.3 ) Earnings from
discontinued operation — (340.7 ) Loss from continuing
operations (521.7 ) (420.0 ) Adjustments to reconcile loss from
continuing operations to net cash provided by operating activities
1,895.6 1,740.4 Net cash used by operating activities of
discontinued operation — (9.6 ) Net cash provided by
operating activities 1,373.9 1,310.8 Cash flows from
investing activities: Capital expenditures (661.2 ) (735.0 )
Investments in and loans to affiliates and others (122.7 ) (9.1 )
Proceeds received upon disposition of discontinued operation, net
of disposal costs — 993.0 Other investing activities, net 8.9 (17.2
) Net cash used by investing activities of discontinued operation —
(3.8 ) Net cash provided (used) by investing activities
(775.0 ) 227.9 Cash flows from financing activities:
Borrowings of debt 6,695.2 1,547.8 Repayments and repurchases of
debt and capital lease obligations (6,543.0 ) (2,051.6 ) Net cash
paid related to derivative instruments (486.5 ) (98.2 ) Repurchase
of Liberty Global shares (425.9 ) (376.8 ) Payment of financing
costs and debt premiums (269.8 ) (39.1 ) Net cash paid associated
with call option contracts on Liberty Global shares (122.9 ) (156.0
) Change in cash collateral 61.8 4.4 Other financing activities,
net (19.5 ) 7.2 Net cash used by financing activities of
discontinued operation — (1.2 ) Net cash used by financing
activities (1,110.6 ) (1,163.5 ) Effect of exchange rate
changes on cash - continuing operations (16.4 ) 15.0 Net
increase (decrease) in cash and cash equivalents: Continuing
operations (528.1 ) 404.8 Discontinued operation — (14.6 )
Net increase (decrease) in cash and cash equivalents (528.1 ) 390.2
Cash and cash equivalents: Beginning of period 1,158.5
2,701.9 End of period $ 630.4 $ 3,092.1
Cash paid for interest - continuing operations $ 672.4 $
631.1 Net cash paid for taxes: Continuing operations
$ 123.0 $ 32.5 Discontinued operation — 0.9 Total $
123.0 $ 33.4
Revenue and Operating Cash Flow
In the following tables, we present revenue and operating cash
flow by reportable segment of our continuing operations for the
three months ended March 31, 2015, as compared to the corresponding
prior year period. All of our reportable segments derive their
revenue primarily from broadband communications services, including
video, broadband internet and fixed-line telephony services. Most
of our reportable segments also provide B2B services and all of our
reportable segments provide mobile services. We present only the
reportable segments of our continuing operations in the tables
below. For information regarding the composition of our segments,
including changes that we made during the fourth quarter of 2014,
see note 14 to the condensed consolidated financial statements
included in our most recently filed Form 10-Q.
For purposes of calculating rebased growth rates on a comparable
basis for all businesses that we owned during 2015, we have
adjusted our historical revenue and OCF for the three months ended
March 31, 2014 to (i) include the pre-acquisition revenue and OCF
of certain entities acquired during 2014 and 2015 in our rebased
amounts for the three months ended March 31, 2014 to the same
extent that the revenue and OCF of such entities are included in
our results for the three months ended March 31, 2015, (ii) remove
intercompany eliminations for the applicable periods in 2014 to
conform to the presentation during the 2015 periods following the
disposal of the Chellomedia operations, which resulted in
previously eliminated intercompany costs becoming third-party
costs, (iii) exclude the pre-disposition revenue and OCF of offnet
subscribers in the U.K. that were disposed in the fourth quarter of
2014 and the first quarter of 2015 from our rebased amounts for the
three months ended March 31, 2014 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, 2015, (iv) exclude the
revenue and OCF related to a partner network agreement that was
terminated shortly after the Ziggo acquisition from our rebased
amounts for the three months ended March 31, 2014 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, 2015
and (v) reflect the translation of our rebased amounts for the
three months ended March 31, 2014 at the applicable average foreign
currency exchange rates that were used to translate our results for
the three months ended March 31, 2015. We have included Ziggo and
three small entities in whole or in part in the determination of
our rebased revenue and OCF for the three months ended March 31,
2014. We have reflected the revenue and OCF of the acquired
entities in our 2014 rebased amounts based on what we believe to be
the most reliable information that is currently available to us
(generally pre-acquisition financial statements), as adjusted for
the estimated effects of (a) any significant differences between
Generally Accepted Accounting Principles in the United States
(“GAAP”) and local generally accepted accounting principles, (b)
any significant effects of acquisition accounting adjustments, (c)
any significant differences between our accounting policies and
those of the acquired entities and (d) other items we deem
appropriate. We do not adjust pre-acquisition periods to eliminate
nonrecurring items or to give retroactive effect to any changes in
estimates that might be implemented during post-acquisition
periods. As we did not own or operate the acquired businesses
during the pre-acquisition periods, no assurance can be given that
we have identified all adjustments necessary to present the revenue
and OCF of these entities on a basis that is comparable to the
corresponding post-acquisition amounts that are included in our
historical results or that the pre-acquisition financial statements
we have relied upon do not contain undetected errors. The
adjustments reflected in our rebased amounts have not been prepared
with a view towards complying with Article 11 of Regulation S-X. In
addition, the rebased growth percentages are not necessarily
indicative of the revenue and OCF that would have occurred if these
transactions had occurred on the dates assumed for purposes of
calculating our rebased amounts or the revenue and OCF that will
occur in the future. The rebased growth percentages have been
presented as a basis for assessing growth rates on a comparable
basis, and are not presented as a measure of our pro forma
financial performance. 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 2015 2014
$ % Rebased % in millions, except %
amounts European Operations Division: U.K./Ireland $ 1,711.4 $
1,847.5 $ (136.1 ) (7.4 ) 2.5 The Netherlands 707.4 318.1 389.3
122.4 0.6 Germany 597.9 695.9 (98.0 ) (14.1 ) 4.6 Belgium 502.7
574.2 (71.5 ) (12.5 ) 6.5 Switzerland/Austria 439.3 463.8
(24.5 ) (5.3 ) 3.8 Total Western Europe 3,958.7 3,899.5 59.2
1.5 3.1 Central and Eastern Europe 268.2 323.9 (55.7 ) (17.2 ) 0.8
Central and other (2.8 ) (0.8 ) (2.0 ) N.M. * Total European
Operations Division 4,224.1 4,222.6 1.5 —
2.9 Chile 208.8 225.3 (16.5 ) (7.3 ) 4.8 Corporate and other
91.8 93.1 (1.3 ) (1.4 ) * Intersegment eliminations (7.8 ) (7.3 )
(0.5 ) N.M. * Total $ 4,516.9 $ 4,533.7 $ (16.8 )
(0.4 ) 3.1
* - Omitted; N.M. - Not Meaningful
Three months ended Increase
Increase March 31, (decrease)
(decrease) Operating Cash Flow 2015
2014 $ % Rebased % in
millions, except % amounts European Operations Division:
U.K./Ireland $ 763.3 $ 791.6 $ (28.3 ) (3.6 ) 6.5 The Netherlands
367.9 183.3 184.6 100.7 (3.5 ) Germany 364.0 429.0 (65.0 ) (15.2 )
3.3 Belgium 247.0 302.1 (55.1 ) (18.2 ) (0.2 ) Switzerland/Austria
248.8 264.4 (15.6 ) (5.9 ) 2.6 Total Western
Europe 1,991.0 1,970.4 20.6 1.0 2.6 Central and Eastern Europe
118.1 158.2 (40.1 ) (25.3 ) (9.2 ) Central and other (67.9 ) (70.9
) 3.0 4.2 * Total European Operations Division
2,041.2 2,057.7 (16.5 ) (0.8 ) 1.4 Chile 76.0 82.7 (6.7 ) (8.1 )
3.7 Corporate and other (19.9 ) (16.9 ) (3.0 ) (17.8 ) *
Intersegment eliminations — 4.0 (4.0 ) N.M. *
Total
$ 2,097.3 $ 2,127.5 $ (30.2 ) (1.4 ) 1.2
* - Omitted; N.M. - Not Meaningful
Operating Cash Flow Definition and Reconciliation
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 revenue less operating and SG&A expenses (excluding
share-based compensation, depreciation and amortization, 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 operating cash flow 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 operating cash flow 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,
2015 2014 in millions Total segment
operating cash flow $ 2,097.3 $ 2,127.5 Share-based compensation
expense (71.4 ) (55.1 ) Depreciation and amortization (1,451.4 )
(1,377.1 ) Impairment, restructuring and other operating items, net
(17.0 ) (113.6 ) Operating income $ 557.5 $ 581.7
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, 2015:
Capital Debt & Capital
Cash Lease Lease and Cash
Debt2 Obligations Obligations
Equivalents in millions Liberty Global and
unrestricted subsidiaries $ 1,535.6 $ 66.8 $ 1,602.4 $ 206.6 Virgin
Media3 14,094.5 231.3 14,325.8 54.3 UPC Holding 6,142.6 27.4
6,170.0 48.0 Unitymedia 7,375.2 712.5 8,087.7 9.3 Ziggo Group
Holding 7,824.5 0.4 7,824.9 93.8 Telenet 3,631.2 367.9 3,999.1
138.4 VTR Finance 1,400.0 0.5 1,400.5 49.8 Liberty Puerto Rico
672.0 0.9 672.9 30.2 Total Liberty Global $
42,675.6 $ 1,407.7 $ 44,083.3 $ 630.4
Property and Equipment Additions and Capital
Expenditures
The table below highlights the categories of our property and
equipment additions for the indicated periods and reconciles those
additions to the capital expenditures that we present in our
condensed consolidated statements of cash flows:
Three months ended March 31, 2015
2014
in millions, except
%amounts
Customer premises equipment $ 297.7 $ 344.5 Scalable infrastructure
152.7 168.8 Line extensions 107.6 106.8 Upgrade/rebuild 119.8 134.8
Support capital & other 247.1 155.3 Property and
equipment additions 924.9 910.2 Assets acquired under
capital-related vendor financing arrangements (295.0 ) (170.5 )
Assets acquired under capital leases (62.0 ) (49.0 ) Changes in
current liabilities related to capital expenditures 93.3
44.3 Capital expenditures4 $ 661.2 $ 735.0
Property and equipment additions as % of revenue 20.5 % 20.1
%
_________________________________
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 Inc., but excludes Virgin Media. The cash and cash
equivalents amount includes cash and cash equivalents held by the
Virgin Media borrowing group, but excludes $1 million of cash and
cash equivalents held by Virgin Media. This amount is included in
the amount shown for Liberty Global and unrestricted subsidiaries.
In addition, the $57 million carrying value of the 6.5% convertible
notes of Virgin Media is excluded from the debt of the Virgin Media
borrowing group and included in the debt of Liberty Global and
unrestricted subsidiaries. 4 The capital expenditures that we
report in our condensed consolidated statements of cash flows do
not include amounts that are financed under vendor financing or
capital lease arrangements. Instead, these expenditures are
reflected as non-cash additions to our property and equipment when
the underlying assets are delivered, and as repayments of debt when
the related principal is repaid.
Free Cash Flow Definition and Reconciliation
We define free cash flow as net cash provided by our operating
activities, plus (i) excess tax benefits related to the exercise of
share-based incentive awards and ((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 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
consolidated statements of cash flows. The following table provides
the reconciliation of our continuing operations' net cash provided
by operating activities to FCF for the indicated periods:
Three months ended March 31, 2015
2014 in millions Net cash provided by
operating activities of our continuing operations $ 1,373.9 $
1,320.4 Excess tax benefits from share-based compensation5 20.0 —
Cash payments for direct acquisition and disposition costs6 7.6
11.2 Expenses financed by an intermediary7 9.1 6.9 Capital
expenditures (661.2 ) (735.0 ) Principal payments on amounts
financed by vendors and intermediaries (381.7 ) (220.8 ) Principal
payments on certain capital leases (37.7 ) (46.4 ) FCF $
330.0 $ 336.3
______________________________________
5 Excess tax benefits from share-based compensation
represent the excess of tax deductions over the related financial
reporting share-based compensation expense. The hypothetical cash
flows associated with these excess tax benefits are reported as an
increase to cash flows from financing activities and a
corresponding decrease to cash flows from operating activities in
our consolidated statements of cash flows. 6 Represents costs paid
during the period to third parties directly related to acquisitions
and dispositions. 7 For purposes of our consolidated statement of
cash flows, expenses financed by an intermediary are treated as
hypothetical operating cash outflows and hypothetical financing
cash inflows when the expenses are incurred. When we pay the
financing intermediary, we record financing cash outflows in our
consolidated statements of cash flows. For purposes of our free
cash flow definition, we add back the hypothetical operating cash
outflow when these financed expenses are incurred and deduct the
financing cash outflows when we pay the financing intermediary. The
inclusion of this adjustment represents a change in our definition
of free cash flow that we implemented effective January 1, 2015.
The free cash flow reported for the 2014 period has been revised to
calculate free cash flow on a basis that is consistent with the new
definition.
ARPU per Customer Relationship8
The following table provides ARPU per customer relationship for
the indicated periods:
Three months endedMarch
31,
%
FX-Neutral9
2015 2014 Change % Change
Liberty Global Consolidated $ 44.42 $ 48.84 (9.0 )%
4.7 % European Operations Consolidated € 38.77 € 35.01 10.7 % 5.1 %
U.K. & Ireland (Virgin Media) £ 48.73 £ 48.58 0.3 % 1.2 %
Germany (Unitymedia) € 22.46 € 21.04 6.7 % 6.7 % Belgium (Telenet)
€ 50.01 € 47.25 5.8 % 5.8 % The Netherlands € 44.39 € 43.31 2.5 %
2.5 % Other Europe € 26.82 € 24.61 9.0 % 2.8 % Chile (VTR) CLP
32,210 CLP 31,673 1.7 % 1.7 %
Mobile Statistics10
The following tables provide ARPU per mobile subscriber11 and
mobile subscribers12 for the indicated periods:
ARPU per Mobile Subscriber
Three months endedMarch
31,
% FX-Neutral9 2015
2014 Change % Change Liberty Global
Consolidated: Including interconnect revenue $ 22.43 $ 25.79 (13.0
)% (2.1 )% Excluding interconnect revenue $ 18.44 $ 20.86 (11.6 )%
(0.8 )%
Mobile
Subscribers
March 31,2015
December 31,2014
Change European Operations: U.K. 3,007,300 3,053,000
(45,700 ) Belgium 924,500 894,500 30,000 Germany 322,700 309,800
12,900 The Netherlands 158,400 129,500 28,900 Switzerland 14,600
8,800 5,800 Austria 500 200 300 Total Western
Europe 4,428,000 4,395,800 32,200 Hungary
15,100 11,200 3,900 Poland 9,400 10,600 (1,200 )
Total CEE 24,500 21,800 2,700
Total European Operations 4,452,500 4,417,600 34,900 Chile 117,500
110,500 7,000
Grand Total
4,570,000 4,528,100 41,900
_______________________________
8
Please see page 8 for the definition of
ARPU per customer.
9
Please see page 8 for information
regarding the FX-Neutral change in ARPU.
10
Please see page 8 for the definition of
mobile subscriber.
11 Our ARPU per mobile subscriber calculation that excludes
interconnect revenue refers to the average monthly mobile
subscription revenue per average mobile subscribers in service and
is calculated by dividing the average monthly mobile subscription
revenue (excluding activation fees, handset sales and late fees)
for the indicated period, by the average of the opening and closing
balances of mobile subscribers in service for the period. Our ARPU
per mobile subscriber calculation that includes interconnect
revenue increases the numerator in the above-described calculation
by the amount of mobile interconnect revenue during the period. 12
With the exception of the U.K. and Chile, all of our mobile
subscribers receive mobile services pursuant to postpaid contracts.
As of March 31, 2015 and December 31, 2014, the mobile subscriber
count in the U.K. included 879,100 and 943,600 prepaid mobile
subscribers, respectively, and the mobile subscriber count in Chile
included 12,800 and 19,800 prepaid mobile subscribers,
respectively.
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, 2015, December 31, 2014 and March 31, 2014: 13
March 31,2015
December 31,2014
March 31,2014
Q1’15 / Q4’14(% Change)
Q1’15 / Q1’14(% Change)
Total RGUs Total Video RGUs 24,178,100 24,335,700 21,727,400
(0.6 %) 11.3 % Total Broadband Internet RGUs 17,424,500 17,275,300
14,611,800 0.9 % 19.2 % Total Telephony RGUs 14,419,600
14,330,900 12,298,100 0.6 % 17.3 % Liberty Global
Consolidated 56,022,200 55,941,900 48,637,300 0.1 % 15.2 %
Total Customers European Operations Division 25,820,100
25,802,600 23,018,600 0.1 % 12.2 % VTR 1,237,900 1,225,300
1,210,300 1.0 % 2.3 % Puerto Rico 283,200 281,600
275,300 0.6 % 2.9 % Liberty Global Consolidated 27,341,200
27,309,500 24,504,200 0.1 % 11.6 % Total Single-Play
Customers 10,750,100 10,730,900 10,468,700 0.2 % 2.7 % Total
Double-Play Customers 4,501,200 4,524,900 3,937,900 (0.5 %) 14.3 %
Total Triple-Play Customers 12,089,900 12,053,700 10,097,600 0.3 %
19.7 %
% Double-Play Customers European Operations
Division 16.2 % 16.3 % 15.7 % (0.6 %) 3.2 % VTR 22.2 % 22.1 % 21.2
% 0.5 % 4.7 % Liberty Global Consolidated 16.5 % 16.6 % 16.1 % (0.6
%) 2.5 %
% Triple-Play Customers European Operations
Division 44.1 % 44.0 % 40.9 % 0.2 % 7.8 % VTR 46.6 % 46.6 % 46.7 %
— % (0.2 %) Liberty Global Consolidated 44.2 % 44.1 % 41.2 % 0.2 %
7.3 %
RGUs per Customer Relationship European
Operations Division 2.04 2.04 1.98 — % 3.0 % VTR 2.15 2.15 2.15 — %
— % Liberty Global Consolidated 2.05 2.05 1.98 — % 3.5 % 13
The March 31, 2014 amounts do not include the impact of the
Ziggo acquisition. Consolidated Operating Data —
March 31, 2015
Video
HomesPassed(1)
Two-wayHomesPassed(2)
CustomerRelationships(3)
TotalRGUs(4)
Basic
VideoSubscribers(5)
Enhanced Video
Subscribers(6)
DTHSubscribers(7)
MMDSSubscribers(8)
TotalVideo
InternetSubscribers(9)
TelephonySubscribers(10)
European Operations Division: U.K. 12,660,600 12,632,500 5,026,300
12,536,500 — 3,749,000 — — 3,749,000 4,563,700 4,223,800 Germany
12,722,400 12,415,800 7,111,600 12,231,000 5,131,500 1,393,400 — —
6,524,900 2,931,000 2,775,100 The Netherlands(11) 6,993,600
6,979,200 4,241,900 9,884,800 871,800 3,368,100 — — 4,239,900
3,076,300 2,568,600 Belgium 2,921,100 2,921,100 2,186,600 4,780,400
383,300 1,688,100 — — 2,071,400 1,534,500 1,174,500 Switzerland(11)
2,193,800 2,193,200 1,417,900 2,590,600 688,300 682,000 — —
1,370,300 739,800 480,500 Austria 1,355,700 1,355,700 649,500
1,348,600 146,700 362,900 — — 509,600 468,800 370,200 Ireland
853,300 757,100 511,800 1,101,900
37,500 321,500 — 27,500 386,500
365,800 349,600 Total Western Europe 39,700,500
39,254,600 21,145,600 44,473,800 7,259,100
11,565,000 — 27,500 18,851,600
13,679,900 11,942,300
Poland
2,794,900 2,718,800 1,425,200 2,752,200 266,600 921,700 — —
1,188,300 1,004,000 559,900 Hungary 1,580,600 1,564,200 1,078,100
1,985,800 201,700 439,400 281,200 — 922,300 562,300 501,200 Romania
2,452,500 2,340,200 1,177,800 1,927,500 296,200 556,800 317,200 —
1,170,200 444,000 313,300 Czech Republic 1,396,900 1,326,800
714,700 1,184,900 90,400 365,900 115,300 — 571,600 446,600 166,700
Slovakia 505,000 482,600 278,700 432,200
35,400 142,900 66,400 600
245,300 118,800 68,100 Total CEE 8,729,900
8,432,600 4,674,500 8,282,600 890,300
2,426,700 780,100 600 4,097,700
2,575,700 1,609,200 Total Europe 48,430,400 47,687,200
25,820,100 52,756,400 8,149,400 13,991,700 780,100 28,100
22,949,300 16,255,600 13,551,500 Chile 2,985,800 2,467,000
1,237,900 2,664,900 106,100 902,300 — — 1,008,400 954,900 701,600
Puerto Rico 706,900 706,900 283,200 600,900
— 220,400 — — 220,400
214,000 166,500
Grand Total 52,123,100
50,861,100 27,341,200
56,022,200 8,255,500 15,114,400
780,100 28,100 24,178,100
17,424,500 14,419,600
Subscriber Variance Table - March 31, 2015 vs. December 31, 2014
Video
HomesPassed(1)
Two-wayHomesPassed(2)
CustomerRelationships(3)
TotalRGUs(4)
Basic
VideoSubscribers(5,12)
EnhancedVideoSubscribers(6,12)
DTHSubscribers(7)
MMDSSubscribers(8)
TotalVideo
InternetSubscribers(9)
TelephonySubscribers(10)
European Operations Division: U.K. 33,200 34,100 9,800 23,000 —
(11,300 ) — — (11,300 ) 27,100 7,200 Germany 9,100 13,900 (15,200 )
28,700 851,400 (884,400 ) — — (33,000 ) 34,600 27,100 The
Netherlands(11) 10,900 11,200 (49,700 ) (46,600 ) (30,300 ) (19,200
) — — (49,500 ) 10,300 (7,400 ) Belgium 4,800 4,800 119,900 28,900
(106,800 ) 111,500 — — 4,700 3,900 20,300 Switzerland(11) 500 800
(15,100 ) 5,400 (9,500 ) (7,300 ) — — (16,800 ) 10,400 11,800
Austria 5,300 5,300 (3,600 ) (2,300 ) (6,300 ) (1,500 ) — — (7,800
) 4,800 700 Ireland (1,500 ) 2,200 (7,200 ) (9,300 ) (2,600
) (11,700 ) — (2,700 ) (17,000 ) 2,400 5,300
Total Western Europe 62,300 72,300 38,900
27,800 695,900 (823,900 ) — (2,700 ) (130,700
) 93,500 65,000 Poland 11,000 12,700 (12,200 ) (2,800
) (16,000 ) 2,900 — — (13,100 ) 6,800 3,500 Hungary 24,200 23,900
2,200 18,500 (7,900 ) 8,500 800 — 1,400 8,200 8,900 Romania 47,300
57,400 (8,500 ) 2,300 (9,400 ) 8,400 (7,600 ) — (8,600 ) 10,500 400
Czech Republic 24,200 44,400 (1,600 ) (1,000 ) 800 (3,600 ) 3,300 —
500 1,600 (3,100 ) Slovakia 500 600 (1,300 ) (100 )
(3,900 ) 1,100 300 — (2,500 ) 2,000 400
Total CEE 107,200 139,000 (21,400 ) 16,900
(36,400 ) 17,300 (3,200 ) — (22,300 ) 29,100
10,100 Total Europe 169,500 211,300 17,500 44,700
659,500 (806,600 ) (3,200 ) (2,700 ) (153,000 ) 122,600 75,100
Chile 7,000 7,300 12,600 25,600 (5,500 ) 400 — — (5,100 )
22,900 7,800 Puerto Rico 400 400 1,600 10,000
— 500 — — 500 3,700
5,800
Grand Total 176,900
219,000 31,700 80,300
654,000 (805,700 ) (3,200
) (2,700 ) (157,600 )
149,200 88,700
Organic Change
Summary:
U.K. 39,300 40,300 9,800 23,000 — (11,300 ) — — (11,300 ) 27,100
7,200 Germany 9,100 13,900 (15,200 ) 28,700 (65,500 ) 32,500 — —
(33,000 ) 34,600 27,100 The Netherlands 10,900 11,200 (49,700 )
(46,600 ) (30,300 ) (19,200 ) — — (49,500 ) 10,300 (7,400 ) Belgium
4,800 4,800 (9,700 ) 14,300 (19,900 ) 8,000 — — (11,900 ) 11,200
15,000 Other Europe 87,200 102,800 (44,000 ) 13,400
(48,900 ) (3,600 ) (3,200 ) (2,700 ) (58,400 ) 44,100
27,700 Total Europe 151,300 173,000 (108,800 )
32,800 (164,600 ) 6,400 (3,200 ) (2,700 ) (164,100 )
127,300 69,600 Chile 7,000 7,300 12,600 25,600 (5,500
) 400 — — (5,100 ) 22,900 7,800 Puerto Rico 400 400
1,600 10,000 — 500 — —
500 3,700 5,800
Total Organic Change
158,700 180,700 (94,600 )
68,400 (170,100 ) 7,300
(3,200 ) (2,700 ) (168,700
) 153,900 83,200
Q1 2015
Adjustments:
Acquisition - Poland 1,000 1,000 2,600 3,200 — 400 — — 400 2,600
200 U.K. Adjustments (6,100 ) (6,200 ) — — — — — — — — — Germany
Adjustments(12) — — — — 916,900 (916,900 ) — — — — — Belgium
Adjustments(12) — — 129,600 14,600 (86,900 ) 103,500 — — 16,600
(7,300 ) 5,300 Switzerland Adjustments — — (5,900 ) (5,900 ) (5,900
) — — — (5,900 ) — — Czech Republic Adjustments 23,300
43,500 — — — — — —
— — —
Net Adjustments 18,200
38,300 126,300 11,900
824,100 (813,000 ) —
— 11,100 (4,700 )
5,500 Net Adds (Reductions)
176,900 219,000 31,700
80,300 654,000 (805,700 )
(3,200 ) (2,700 ) (157,600
) 149,200 88,700
Footnotes for Operating Data and Subscriber Variance Tables
_____________________________________________________________________
(1) Homes Passed are homes, residential multiple dwelling
units or commercial units that can be connected to our networks
without materially extending the distribution plant, except for DTH
and Multi-channel Multipoint (“microwave”) Distribution System
(“MMDS”) homes. Our Homes Passed counts are based on census data
that can change based on either revisions to the data or from new
census results. We do not count homes passed for DTH. With respect
to MMDS, one MMDS customer is equal to one Home Passed. Due to the
fact that we do not own the partner networks (defined below) used
in Switzerland and the Netherlands (see note 11) we do not report
homes passed for Switzerland's and the Netherlands' partner
networks. (2) Two-way Homes Passed are Homes Passed by those
sections of our networks that are technologically capable of
providing two-way services, including video, internet and telephony
services. (3)
Customer Relationships are the number of
customers who receive at least one of our video, internet or
telephony services that we count as Revenue Generating Units
(“RGUs”), without regard to which or to how many services they
subscribe. To the extent that RGU counts include equivalent billing
unit (“EBU”) adjustments, we reflect corresponding adjustments to
our Customer Relationship counts. For further information regarding
our EBU calculation, see Additional General Notes to Tables.
Customer Relationships generally are counted on a unique premises
basis. Accordingly, if an individual receives our services in two
premises (e.g., a primary home and a vacation home), that
individual generally will count as two Customer Relationships. We
exclude mobile-only customers from Customer Relationships.
(4)
Revenue Generating Unit is separately a
Basic Video Subscriber, Enhanced Video Subscriber, DTH Subscriber,
MMDS Subscriber, Internet Subscriber or Telephony Subscriber. A
home, residential multiple dwelling unit, or commercial unit may
contain one or more RGUs. For example, if a residential customer in
our Austrian system subscribed to our enhanced video service,
telephony service and broadband internet service, the customer
would constitute three RGUs. Total RGUs is the sum of Basic Video,
Enhanced Video, DTH, MMDS, Internet and Telephony Subscribers. RGUs
generally are counted on a unique premises basis such that a given
premises does not count as more than one RGU for any given service.
On the other hand, if an individual receives one of our services in
two premises (e.g., a primary home and a vacation home), that
individual will count as two RGUs for that service. Each bundled
cable, internet or telephony service is counted as a separate RGU
regardless of the nature of any bundling discount or promotion.
Non-paying subscribers are counted as subscribers during their free
promotional service period. Some of these subscribers may choose to
disconnect after their free service period. Services offered
without charge on a long-term basis (e.g., VIP subscribers, free
service to employees) generally are not counted as RGUs. We do not
include subscriptions to mobile services in our externally reported
RGU counts. In this regard, our March 31, 2015 RGU counts exclude
our separately reported postpaid and prepaid mobile-only
subscribers.
(5) Basic Video Subscriber is a home, residential multiple dwelling
unit or commercial unit that receives our video service over our
broadband network either via an analog video signal or via a
digital video signal without subscribing to any recurring monthly
service that requires the use of encryption-enabling technology.
Encryption-enabling technology includes smart cards, or other
integrated or virtual technologies that we use to provide our
enhanced service offerings. With the exception of RGUs that we
count on an EBU basis, we count RGUs on a unique premises basis. In
other words, a subscriber with multiple outlets in one premises is
counted as one RGU and a subscriber with two homes and a
subscription to our video service at each home is counted as two
RGUs. In Europe, we have approximately 110,400 “lifeline” customers
that are counted on a per connection basis, representing the least
expensive regulated tier of video cable service, with only a few
channels. (6) Enhanced Video Subscriber is a home, residential
multiple dwelling unit or commercial unit that receives our video
service over our broadband network or through a partner network via
a digital video signal while subscribing to any recurring monthly
service that requires the use of encryption-enabling technology.
Enhanced Video Subscribers that are not counted on an EBU basis are
counted on a unique premises basis. For example, a subscriber with
one or more set-top boxes that receives our video service in one
premises is generally counted as just one subscriber. An Enhanced
Video Subscriber is not counted as a Basic Video Subscriber. As we
migrate customers from basic to enhanced video services, we report
a decrease in our Basic Video Subscribers equal to the increase in
our Enhanced Video Subscribers. Subscribers to enhanced video
services provided by our operations in Switzerland and the
Netherlands over partner networks receive basic video services from
the partner networks as opposed to our operations. (7) DTH
Subscriber is a home, residential multiple dwelling unit or
commercial unit that receives our video programming broadcast
directly via a geosynchronous satellite. (8) MMDS Subscriber is a
home, residential multiple dwelling unit or commercial unit that
receives our video programming via MMDS. (9) Internet Subscriber is
a home, residential multiple dwelling unit or commercial unit that
receives internet services over our networks, or that we service
through a partner network. Our Internet Subscribers exclude 40,200
asymmetric digital subscriber line (“ADSL”) subscribers within the
U.K. and 63,900 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 76,700 subscribers who have requested and received this
service. (10) Telephony Subscriber is a home, residential multiple
dwelling unit or commercial unit that receives voice services over
our networks, or that we service through a partner network.
Telephony Subscribers exclude mobile telephony subscribers. Our
Telephony Subscribers exclude 29,400 and 47,200 subscribers within
the U.K. and Austria, respectively, that are not serviced over our
networks. In Switzerland, we offer a basic phone service to our
Basic and Enhanced Video Subscribers without an incremental
recurring fee. Our Telephony Subscribers in Switzerland include
21,400 subscribers who have requested and received this service.
(11) Pursuant to service agreements, Switzerland and, to a much
lesser extent, the Netherlands offer enhanced video, broadband
internet and telephony services over networks owned by third-party
cable operators (“partner networks”). A partner network RGU is only
recognized if there is a direct billing relationship with the
customer. At March 31, 2015, Switzerland's partner networks account
for 141,300 Customer Relationships, 282,000 RGUs, 112,100 Digital
Cable Subscribers, 99,300 Internet Subscribers, and 70,600
Telephony Subscribers. (12) During the first quarter of 2015, we
modified certain video subscriber definitions to better align these
definitions with the underlying services received by our
subscribers and have replaced our “Digital Cable” and “Analog
Cable” subscriber definitions with “Enhanced Video” and “Basic
Video,” respectively. In connection with the implementation of the
new definitions, we reclassified 138,400 Basic Video Subscribers in
Belgium to Enhanced Video Subscribers as these subscribers use
purchased set-top boxes to receive an encrypted digital video
signal. Additionally, we reclassified 916,900 Enhanced Video
Subscribers in Germany to Basic Video Subscribers, representing
video subscribers who either pay a recurring rental fee for a
leased set-top box or pay a recurring access fee, but do not
subscribe to any recurring encrypted video content.
Additional General Notes to
Tables:
Most of our broadband communications subsidiaries provide
telephony, broadband internet, data, video or other B2B services.
Certain of our B2B revenue is derived from small or home office
(“SOHO”) subscribers that pay a premium price to receive enhanced
service levels along with video, internet or telephony services
that are the same or similar to the mass marketed products offered
to our residential subscribers. All mass marketed products provided
to SOHOs, whether or not accompanied by enhanced service levels
and/or premium prices, are included in the respective RGU and
customer counts of our broadband communications operations, with
only those services provided at premium prices considered to be
“SOHO RGUs” or “SOHO customers.” With the exception of our B2B SOHO
subscribers, we generally do not count customers of B2B services as
customers or RGUs for external reporting purposes.
Certain of our residential and commercial RGUs are counted on an
EBU basis, including residential multiple dwelling units and
commercial establishments such as bars, hotels and hospitals in
Chile and Puerto Rico and certain commercial and residential
multiple dwelling units in Europe (with the exception of Germany
and Belgium, where we do not count any RGUs on an EBU
basis). Our EBUs are generally calculated by dividing the bulk
price charged to accounts in an area by the most prevalent price
charged to non-bulk residential customers in that market for the
comparable tier of service. As such, we may experience variances in
our EBU counts solely as a result of changes in rates. In Germany,
homes passed reflect the footprint and two-way homes passed reflect
the technological capability of our network up to the street
cabinet, with drops from the street cabinet to the building
generally added, and in-home wiring generally upgraded, on an as
needed or success-based basis. In Belgium, Telenet leases a portion
of its network under a long-term capital lease arrangement. These
tables include operating statistics for Telenet's owned and leased
networks.
While we take appropriate steps to ensure that subscriber
statistics are presented on a consistent and accurate basis at any
given balance sheet date, the variability from country to country
in (i) the nature and pricing of products and services, (ii) the
distribution platform, (iii) billing systems, (iv) bad debt
collection experience and (v) other factors add complexity to the
subscriber counting process. We periodically review our subscriber
counting policies and underlying systems to improve the accuracy
and consistency of the data reported on a prospective basis.
Accordingly, we may from time to time make appropriate adjustments
to our subscriber statistics based on those reviews.
Subscriber information for acquired entities is preliminary and
subject to adjustment until we have completed our review of such
information and determined that it is presented in accordance with
our policies.
Liberty GlobalInvestor
Relations:Oskar Nooij, +1 303 220 4218Christian
Fangmann, +49 221 84 62 5151John Rea, +1 303 220 4238orCorporate Communications:Marcus Smith, +44
20 7190 6374Bert Holtkamp, +31 20 778 9800Hanne Wolf, +1 303 220
6678
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