Continued commercial momentum in Q1 across our FMC Champions,
including a strong broadband performance in the U.K.
Announced intentions to buyout remaining Telenet stake and
redomicile to Bermuda
Repurchased $330 million of stock through May 5th
On track for all full-year OpCo and Group guidance in
20231
Liberty Global plc today announced its Q1 2023 financial
results.
CEO Mike Fries stated, “Our Q1 performance demonstrates that the
need for reliable high-quality connectivity remains strong across
our footprint. This commercial momentum supports our commitment to
investing in our market-leading fixed and mobile networks and
driving product innovation to ensure an exceptional customer
experience. While Q1 saw an anticipated step up in the impact of
energy and labor costs on our core FMC businesses, we are taking
reasonable price adjustments to sustain robust operating margins
alongside digital initiatives and continued synergies. As a result,
we are in a strong position to deliver for our shareholders in
2023, supported by our ample liquidity2 and our 10% minimum buyback
commitment.
In Q1 we continued to grow our aggregate3 broadband and postpaid
mobile base delivering 90,000 net new subscribers, supported by
broadband additions in the U.K., Switzerland and Belgium as well as
continuing positive postpaid mobile trends. On the financial front,
we reported stable revenue growth with a diverse revenue mix at
each operating company. Our Adjusted EBITDA trends were affected by
the anticipated phasing that we flagged for investors in February
related to the timing of price increases and cost inflation
impacts. We recently announced a price rise at Sunrise in
Switzerland and now have price increases planned in all our markets
that will support Adjusted EBITDA through the rest of the year.
The first quarter was active on the strategic front. We
announced our intention to buyout the remaining publicly traded
stake in Telenet at a bid price of €22 per share, with unanimous
support of Telenet’s management and its board of directors. This
transaction offers an attractive premium for Telenet shareholders
to monetize their investment. Additionally, we are proposing a
change in the jurisdiction of our parent company from England &
Wales to Bermuda. This would enable us to have U.S.-style
governance that aligns with our U.S. listing and our largely U.S.
shareholder base. The principal reason for the proposal is to
facilitate future shareholder value creation by moving away from
complex English corporate laws and into a jurisdiction that makes
it substantially easier to facilitate future share buybacks and
self-tender offers, spin-offs and split-offs and other similar
transactions. Shareholder approval is required to effect the
change, and we have filed a preliminary proxy statement describing
the proposals in greater detail. This transaction is not tax
driven, and if approved, the transaction will have no impact on the
day-to-day operations or any of our commitments in the UK and the
rest of Europe where we remain a substantial employer and service
provider.
We are on track for all 2023 full-year guidance metrics at our
operating companies and $1.6 billion of Distributable Cash Flow(i)
at Liberty Global. This is supported by shareholder distributions
from our joint ventures in the U.K. and the Netherlands and
Adjusted Free Cash Flow from our consolidated operating companies
in Switzerland and Belgium. Even after several investments in the
quarter, our balance sheet remains strong with ~$4 billion of
cash(ii) of which $2.8 billion is corporate cash(ii). We plan to
replenish the spent cash throughout the year as we generate
substantial Distributable Cash Flow from our OpCos and potentially
benefit from certain asset sales from our Ventures portfolio. In
addition, our stock continues to offer attractive value at current
price levels. We have repurchased $330 million of stock
year-to-date and will consider accelerating purchases through the
balance of the year.”
(i)
Quantitative reconciliations to cash flow
from operating activities for our Distributable Cash Flow guidance
cannot be provided without unreasonable efforts as we do not
forecast specific changes in working capital that impact cash flows
from operating activities. The items we do not forecast may vary
significantly from period to period. 2023 Distributable Cash Flow
guidance reflects FX rates of EUR/USD 1.07, GBP/USD 1.21 and
CHF/USD 1.08.
(ii)
Including amounts held under separately
managed accounts (SMAs).
Q1 Operating Company Highlights
Sunrise (Consolidated)
Momentum in mobile continues, with strong postpaid mobile
intake and stable revenues; Reiterating all 2023 financial
guidance
Operating highlights: Sunrise is
maintaining its commercial momentum despite continued headwinds in
fixed as a result of the competitive landscape and the continued
migration of UPC's legacy broadband base. Sunrise continued
momentum in mobile postpaid additions, despite some increased
seasonality after a strong Q4, achieving 36,100 mobile postpaid net
adds in Q1. Sunrise also maintained positive broadband net adds of
7,200 in Q1 despite the ongoing phase out of the UPC brand,
supported by improved churn trends and flanker brand sales. FMC
penetration remains high at 58% across Sunrise’s broadband
base.
Financial highlights: Revenue of
$807.4 million in Q1 2023 decreased 1.7% YoY on both a reported and
rebased4 basis. The rebased decrease was largely driven by a
decline in fixed subscription revenue due to ARPU pressure on our
main brand offerings that was only partially offset by strong
trading momentum in yallo. Adjusted EBITDA decreased 9.6% on a
reported basis and 9.2% on a rebased basis to $263.0 million in Q1
2023, including $4 million of costs to capture5. The rebased
decline was largely driven by the impact of (i) consumer fixed ARPU
decline and (ii) an increase in costs related to (a) marketing, (b)
hardware, (c) programming phasing and (d) network and logistics,
partially due to inflation. Adjusted EBITDA less P&E Additions
of $114.0 million in Q1 decreased 19.4% YoY on a reported basis and
18.2% on a rebased basis, including $13 million of opex and capex
costs to capture.
Telenet (Consolidated)
Continued FMC customer growth, while inflationary pressures
resulted in a decrease in net profit and Adjusted EBITDAaL in Q1
2023; Reconfirming FY 2023 guidance
Operating highlights: Telenet added
13,100 mobile postpaid customers in Q1, driven by continued FMC
growth and a strong performance at BASE. The broadband base
modestly contracted by 1,800 RGUs in Q1, reflecting an intense
competitive environment, and both video and fixed-line telephony
RGUs continued to contract, mainly driven by macroeconomic trends
and shifting consumer preferences. In addition, the NetCo agreement
with Fluvius is now expected to close in summer 2023.
Financial highlights: Revenue of
$754.5 million in Q1 2023 increased 4.2% YoY on a reported basis
and 2.9% on a rebased basis. The increase in rebased revenue was
primarily driven by (i) higher advertising and production revenue,
(ii) an increase in B2B revenue and (iii) higher subscription
revenue. Adjusted EBITDA decreased 10.4% on a reported basis and
4.0% on a rebased basis to $302.9 million in Q1. The rebased
decrease was driven by an increase in operating expenses, including
(a) higher staff-related expenses, (b) higher programming costs and
(c) higher energy spend. Reported and rebased Adjusted EBITDA less
P&E Additions decreased 27.7% and 20.0%, respectively, to
$129.9 million in Q1.
VMO2 (Non-consolidated Joint Venture)
VMO2 builds the foundations for growth in 2023 through
integration and network evolution
Operating highlights: VMO2 remains
focused on customer experience and continues to optimize the
potential of its networks through Volt, its flagship converged
offering. The fixed customer base grew by 20,900 net adds in Q1,
supported by a reduced level of customer churn. Demand for fast and
high-quality broadband continued, with Q1 broadband net adds of
28,800, while the average download speed across its broadband base
increased 36% YoY to 315 Mbps, approximately 5x higher than the
national average. During Q1, VMO2 built 108,000 FTTH premises, the
majority of which were built for the nexfibre JV. In mobile, VMO2
reached 50% 5G coverage in more than 2,100 towns and cities and
remains on track to deliver 5G services to more than 50% of the
entire U.K. population this year.
Financial highlights (in U.S.
GAAP)6: Revenue7 of $3,162.7 million in Q1 2023 decreased
6.9% YoY on a reported basis and 0.1% YoY on a rebased basis,
primarily due to the net effect of (i) an increase in mobile
revenue driven by higher handset revenue, (ii) a decrease in
consumer fixed revenue and (iii) a decline in B2B fixed revenue due
to lower installation revenue, with each revenue category as
defined and reported by the VMO2 JV. Adjusted EBITDA7 decreased
26.5% YoY on a reported basis and 1.7% YoY on a rebased basis to
$1,025.9 million, including $28 million of opex costs to capture,
primarily due to the net effect of (a) increased energy costs and
(b) the realization of synergies. Adjusted EBITDA less P&E
Additions7 decreased 40.9% YoY on a reported basis and 18.1% YoY on
a rebased basis to $435.3 million, including $58 million of opex
and capex costs to capture.
For more information regarding the VMO2 JV, including full IFRS
disclosures, please visit their investor relations page to access
the Q1 earnings release.
VodafoneZiggo (Non-consolidated Joint Venture)
Mobile and B2B Momentum; On Track to Deliver 2023
Guidance
Operating highlights: VodafoneZiggo
continues to improve its commercial momentum, as FMC households8
grew by 6,400 in Q1 to over 1.5 million households, and FMC SIMs
increased by 9,800 in Q1 to nearly 2.6 million, delivering
significant Net Promoter Scores and customer loyalty benefits.
Mobile postpaid SIMs grew 38,500 to nearly 5.2 million SIMs, while
mobile postpaid ARPU declined 2.3% YoY, primarily driven by ARPU
decline in B2B. Total internet RGUs declined by 8,500 in the
quarter, as a 18,500 decline in Consumer RGUs was only partially
offset by a 10,000 increase in B2B RGUs. Fixed ARPU declined 0.7%
YoY.
Financial highlights: Revenue
decreased 4.1% on a reported basis and increased 0.3% on a rebased
basis to $1,083.4 million in Q1 The rebased increase was primarily
driven by mobile growth that more than offset the effect of a lower
B2C customer base. Adjusted EBITDA decreased 12.3% on a reported
basis and 8.2% on a rebased basis to $471.5 million in Q1. The
rebased decrease was primarily driven by higher energy, wage and
site rental costs related to inflation. Reported and rebased
Adjusted EBITDA less P&E Additions decreased 30.3% and 27.0%,
respectively, to $221.1 million in Q1.
Q1 ESG Highlights
Our Environmental, Social and Governance (ESG) agenda continued
to accelerate in the first quarter, through our focus to be an
inclusive, sustainable and responsible company, across our
organization and throughout our value chain. We are currently
refreshing our group-wide Corporate Responsibility strategy to
reflect the ambitions, developments and insights across our
organization, aligning to our priorities across People, Planet, and
Progress. We are building on our social and sustainability
commitments and initiatives to reset our multi-year plan and
targets in the areas we want to impact most.
In People, we will reflect our culture of Belonging (Diversity,
Equity & Inclusivity) that empowers each of our colleagues to
achieve their potential and bring their whole selves to work every
day, creating inclusive connections so we can have a positive
impact on each other and our communities. After setting our
ambitions in 2022, by end of year we saw an increase in binary
gender representation of women and an increase in the sense of
belonging of all of our people, measured through our dedicated
DE&I survey. All our leadership team has successfully completed
our leadership DE&I masterclass about creating a consciously
inclusive environment. We have trained all our employees on
conscious inclusion, ensuring we all take accountability; created
an inclusive hiring manager training for all our recruiters and
hiring managers, ensuring inclusive hiring practices; and we
continue to measure against our ambitions of increasing diverse
representation and removing any potential bias from our processes
and decision making, with business area specific actions and
reporting. We have worked with our Employee Resource Groups (ERGs),
that focus on gender, race and ethnicity, multigenerational,
disability, neurodiversity, LGBTQIA+ and impact on environment
& society to create educational, engaging moments for
International Women’s Day, volunteering and cultural celebrations.
To continue our learning journey, our Race and Ethnicity ERG has
created a reverse mentoring program for senior leaders to be
mentored by one of the committee members to increase understanding
of the lived experiences of underrepresented ethnicity people
within our company, and we held a psychological safety webinar as
part of wellbeing week, with over 200 employees joining. We have
continued to work with our DE&I council from across the Liberty
Global group and share best practice and ideate on key areas of our
global strategy. We will also be working across the group to create
a greater impact on society through a joint approach, identifying
gaps and creating meaningful action to reduce inequity in the
communities that we operate in.
For Planet, we will build upon our goal to be carbon neutral
across Scope 1 and 2 emissions by 2030, along with our priorities
to procure 100% of our energy from renewable sources, and achieve
energy efficiency across our fixed and mobile networks, as well as
through the products we put in our customers’ homes.
Finally, in Progress, we will pursue opportunities to enhance
our impact on social and sustainable issues across our supply
chain, and as a founding member of the European Green Digital
Coalition, even to industries beyond our own. Our operations
continue to innovate and deliver on ESG matters. VodafoneZiggo
recently published its first Integrated Annual Report which details
the progress made across the company’s sustainability goals and
advancing society, while also growing with customer needs and its
financial performance. The approach reflects not only the
importance VodafoneZiggo places on its ESG commitments, but sets
these priorities firmly alongside business performance.
Liberty Global Consolidated Q1 Highlights
- Q1 revenue increased 0.8% YoY on a reported basis and 1.0% on a
rebased basis to $1,868.4 million
- Q1 earnings (loss) from continuing operations decreased 166.3%
YoY on a reported basis to ($713.5 million)
- Q1 Adjusted EBITDA decreased 8.7% YoY on a reported basis and
6.0% on a rebased basis to $624.5 million
- Q1 property & equipment additions were 20.9% of revenue, as
compared to 20.6% in Q1 2022
- Balance sheet with $5.3 billion of total liquidity
- Comprised of $1.4 billion of cash, $2.4 billion of investments
held under SMAs and $1.5 billion of unused borrowing capacity9
- Blended, fully-swapped borrowing cost of 3.2% on a debt balance
of $15.2 billion
Liberty Global (continuing operations,
unless otherwise noted)
Q1 2023
Q1 2022
YoY Change (reported)
YoY Change (rebased)
Customers
Organic customer net losses
(16,500
)
(3,900
)
(323.1
%)
Financial
(in millions, except percentages)
Revenue
$
1,868.4
$
1,853.3
0.8
%
1.0
%
Earnings (loss) from continuing
operations
$
(713.5
)
$
1,075.7
(166.3
%)
Adjusted EBITDA
$
624.5
$
684.3
(8.7
%)
(6.0
%)
P&E additions
$
389.9
$
381.9
2.1
%
Adjusted EBITDA less P&E Additions
$
234.6
$
302.4
(22.4
%)
(19.0
%)
Cash provided by operating activities
$
307.8
$
605.6
(49.2
%)
Cash used by investing activities
$
(1,423.2
)
$
(39.4
)
(3,512.2
%)
Cash provided (used) by financing
activities
$
813.8
$
(655.7
)
224.1
%
Full Company10 Adjusted FCF
$
(178.4
)
$
137.2
(230.0
%)
Full Company Distributable Cash Flow
$
19.9
$
137.2
(85.5
%)
Customer Growth
Three months ended
March 31,
2023
2022
Organic customer net additions (losses)
by market
Switzerland
2,300
5,400
Belgium
(13,300
)
(5,500
)
Ireland
(2,500
)
(1,400
)
Slovakia
(1,200
)
(2,400
)
Luxembourg(i)
(1,800
)
—
Total
(16,500
)
(3,900
)
______________________
(i)
The 2023 amount relates to our business in
Luxembourg as a result of Telenet's January 2023 acquisition of
Eltrona.
Earnings (Loss) from Continuing Operations
Earnings (loss) from continuing operations was ($713.5 million)
and $1,075.7 million for the three months ended March 31, 2023 and
2022, respectively.
Financial Highlights
The following tables present (i) Revenue, Adjusted EBITDA and
Adjusted EBITDA less P&E Additions for each of our reportable
segments, including the non-consolidated VMO2 JV and VodafoneZiggo
JV, for the comparative periods and (ii) the percentage change from
period to period on both a reported and rebased basis. During the
first quarter of 2023, we changed the terms related to, and
approach to how we reflect the allocation of, charges for certain
products and services that our centrally-managed technology and
innovation function provides to our consolidated reportable
segments (the Tech Framework). For additional information,
see the Appendix. Consolidated Adjusted EBITDA and Consolidated
Adjusted EBITDA less P&E Additions are non-GAAP measures. For
additional information on how these measures are defined and why we
believe they are meaningful, see the Glossary.
Three months ended
Increase/(decrease)
March 31,
Revenue
2023
2022(i)
Reported %
Rebased %
in millions, except %
amounts
Switzerland
$
807.4
$
821.4
(1.7
)
(1.7
)
Belgium
754.5
724.4
4.2
2.9
Ireland
123.0
127.8
(3.8
)
0.7
Central and Other
244.5
241.4
1.3
5.7
Intersegment eliminations(ii)
(61.0
)
(61.7
)
N.M.
N.M.
Total
$
1,868.4
$
1,853.3
0.8
1.0
VMO2 JV(iii)
$
3,162.7
$
3,398.0
(6.9
)
(0.1
)
VodafoneZiggo JV(iii)
$
1,083.4
$
1,130.0
(4.1
)
0.3
______________________
N.M. - Not Meaningful (i)
Amounts have been revised, as applicable,
to reflect the retrospective impact of the Tech Framework, as
described above and in the Appendix.
(ii)
Amounts primarily relate to (i) the
revenue recognized within our T&I Function related to the Tech
Framework and (ii) for the three months ended March 31, 2022,
transactions between our continuing and discontinued
operations.
(iii)
Amounts reflect 100% of the 50:50
non-consolidated VMO2 JV and VodafoneZiggo JV's revenue.
Three months ended
Increase/(decrease)
March 31,
Adjusted EBITDA
2023
2022(i)
Reported %
Rebased %
in millions, except %
amounts
Switzerland
$
263.0
$
290.8
(9.6
)
(9.2
)
Belgium
302.9
338.1
(10.4
)
(4.0
)
Ireland
41.5
47.1
(11.9
)
(8.0
)
Central and Other
32.1
24.8
29.4
11.5
Intersegment eliminations(ii)
(15.0
)
(16.5
)
N.M.
N.M.
Total
$
624.5
$
684.3
(8.7
)
(6.0
)
VMO2 JV(iii)
$
1,025.9
$
1,395.3
(26.5
)
(1.7
)
VodafoneZiggo JV(iii)
$
471.5
$
537.8
(12.3
)
(8.2
)
______________________
N.M. - Not Meaningful (i)
Amounts have been revised, as applicable,
to reflect the retrospective impact of the Tech Framework, as
described above and in the Appendix.
(ii)
Amounts relate to (i) the Adjusted EBITDA
impact to Central and Other of the value attributed to
centrally-held internally developed technology that is embedded
within our various CPE, as well as any applicable markup, and (ii)
for three months ended March 31, 2022, transactions between our
continuing and discontinued operations.
(iii)
Amounts reflect 100% of the 50:50
non-consolidated VMO2 JV and VodafoneZiggo JV's Adjusted
EBITDA.
Three months ended
Increase/(decrease)
Adjusted EBITDA less P&E
Additions
March 31,
2023
2022(i)
Reported %
Rebased %
in millions, except %
amounts
Switzerland
$
114.0
$
141.5
(19.4
)
(18.2
)
Belgium
129.9
179.6
(27.7
)
(20.0
)
Ireland
8.4
17.9
(53.1
)
(51.0
)
Central and Other
(17.7
)
(35.8
)
50.6
37.8
Intersegment eliminations
—
(0.8
)
N.M.
N.M.
Total
$
234.6
$
302.4
(22.4
)
(19.0
)
VMO2 JV(ii)
$
435.3
$
736.0
(40.9
)
(18.1
)
VodafoneZiggo JV(ii)
$
221.1
$
317.4
(30.3
)
(27.0
)
______________________
N.M. - Not Meaningful (i)
Amounts have been revised, as applicable,
to reflect the retrospective impact of the Tech Framework, as
described above and in the Appendix.
(ii)
Amounts reflect 100% of the 50:50
non-consolidated VMO2 JV and VodafoneZiggo JV's Adjusted EBITDA
less P&E Additions.
Leverage and Liquidity
- Total principal amount of debt and
finance leases: $15.2 billion
- Average debt tenor: 5.6 years,
with ~51% not due until 2029 or thereafter11
- Borrowing costs: Blended,
fully-swapped cost of debt was 3.2%
- Liquidity: $5.3 billion, including
(i) $1.4 billion of cash at March 31, 2023, (ii) $2.4 billion of
investments held under SMAs and (iii) $1.5 billion of aggregate
unused borrowing capacity under our credit facilities
Forward-Looking Statements and Disclaimer
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including statements with respect to our strategies, future
growth prospects and opportunities; expectations regarding our and
our businesses' financial performance, including Revenue and
Distributable Cash Flow, as well as the 2023 financial guidance
provided by us and our operating companies and joint ventures;
expectations of any macroeconomic dynamics that may be beneficial
or detrimental to the company; our intention to repurchase all the
outstanding shares of Telenet that we do not already own, including
the purchase price and the potential benefits to be derived
therefrom; our proposed redomiciliation from the U.K. to Bermuda,
including the anticipated benefits resulting from such a move as
well as any impacts on our operations; our anticipated pricing
adjustments in our various markets; the replenishment of our cash
reserves; the potential sale of certain of our Ventures portfolio;
the closing of the NetCo agreement between Telenet and Fluvius, as
well as the expected timing thereof; our commitments and
aspirations with respect to ESG, including our efforts to purchase
renewable energy, reduce e-waste, pursue social impact
opportunities and execute on our DE&I agenda; our share buyback
program, and the anticipated number of shares to be repurchased in
2023; the strength of our and our affiliates' respective balance
sheets (including cash and liquidity position); the tenor and cost
of our third-party debt and anticipated borrowing capacity;
anticipated distributions to be received from our subsidiaries and
joint ventures and other information and statements that are not
historical fact. These forward-looking statements involve certain
risks and uncertainties that could cause actual results to differ
materially from those expressed or implied by these statements.
These risks and uncertainties include events that are outside of
our control, such as the continued use by subscribers and potential
subscribers of our and our affiliates’ and joint ventures' services
and their willingness to upgrade to our more advanced offerings;
our and our affiliates’ ability to meet challenges from
competition, to manage rapid technological change or to maintain or
increase rates to subscribers or to pass through increased costs to
subscribers; the potential impact of pandemics and epidemics on us
and our businesses as well as our customers; the effects of changes
in laws or regulations; the effects of the U.K.'s exit from the
E.U.; general economic factors; our, our affiliates’ and our joint
ventures' ability to obtain regulatory approval and satisfy
regulatory conditions associated with acquisitions and
dispositions; our, our affiliates’ and our joint ventures' ability
to successfully acquire and integrate new businesses and realize
anticipated efficiencies from acquired businesses; the availability
of attractive programming for our, our affiliates’ and our joint
ventures' video services and the costs associated with such
programming; our, our affiliates’ and our joint ventures' ability
to achieve forecasted financial and operating targets; the outcome
of any pending or threatened litigation; the ability of our
operating companies and affiliates and joint ventures to access the
cash of their respective subsidiaries; the impact of our operating
companies', affiliates’ and joint ventures' future financial
performance, or market conditions generally, on the availability,
terms and deployment of capital; fluctuations in currency exchange
and interest rates; the ability of suppliers, vendors and
contractors to timely deliver quality products, equipment,
software, services and access; our, our affiliates’ and our joint
ventures' 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 (the
"SEC"), including our most recently filed Form 10-K, Form 10-K/A
and Form 10-Qs. These forward-looking statements speak only as of
the date of this release. We expressly disclaim any obligation or
undertaking to disseminate any updates or revisions to any
forward-looking statement contained herein to reflect any change in
our expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is
based.
Share Repurchase Program
We previously announced that our Board of Directors authorized a
share repurchase program whereby we have committed to repurchasing
10% of our outstanding shares in 2023. Under the program, Liberty
Global may acquire from time to time its Class A ordinary shares,
Class C ordinary shares, or any combination of Class A and Class C
ordinary shares. The program may be effected through open market
transactions and/or privately negotiated transactions, which may
include derivative transactions. The timing of the repurchase of
shares pursuant to the program will depend on a variety of factors,
including market conditions and applicable law. The program may be
implemented in conjunction with brokers for the Company and other
financial institutions with whom the Company has relationships
within certain pre-set parameters, and purchases may continue
during closed periods in accordance with applicable restrictions.
The program may be suspended or discontinued at any time and will
terminate upon repurchasing the authorized limits unless further
repurchase authorization is provided for.
About Liberty Global
Liberty Global (NASDAQ: LBTYA, LBTYB and LBTYK) is a world
leader in converged broadband, video and mobile communications
services. We deliver next-generation products through advanced
fiber and 5G networks, and currently provide over 86 million
connections* across Europe and the United Kingdom. Our businesses
operate under some of the best-known consumer brands, including
Virgin Media-O2 in the U.K., VodafoneZiggo in The Netherlands,
Telenet in Belgium, Sunrise in Switzerland, Virgin Media in Ireland
and UPC in Slovakia. Through our substantial scale and commitment
to innovation, we are building Tomorrow’s Connections Today,
investing in the infrastructure and platforms that empower our
customers to make the most of the digital revolution, while
deploying the advanced technologies that nations and economies need
to thrive.
Our consolidated businesses generate annual revenue of more than
$7 billion, while the VMO2 JV and VodafoneZiggo JV generate
combined annual revenue of more than $17 billion.**
Liberty Global Ventures, our global investment arm, has a
portfolio of more than 75 companies across content, technology and
infrastructure, including strategic stakes in companies like
Vodafone, ITV, Televisa Univision, Plume, AtlasEdge and the Formula
E racing series.
* Represents aggregate consolidated and 50% owned
non-consolidated fixed and mobile subscribers. Includes wholesale
mobile subscribers of the VMO2 JV and B2B fixed subscribers of the
VodafoneZiggo JV.
** Revenue figures above are provided based on full year 2022
Liberty Global consolidated results (excluding revenue from Poland)
and the combined as reported full year 2022 results for the
VodafoneZiggo JV and full year 2022 U.S. GAAP results for the VMO2
JV. For more information, please visit www.libertyglobal.com.
Balance Sheets, Statements of Operations and Statements of
Cash Flows
The condensed consolidated balance sheets, statements of
operations and statements of cash flows of Liberty Global are in
our 10-Q.
Rebase Information
Rebase growth percentages, which are non-GAAP measures, are
presented as a basis for assessing growth rates on a comparable
basis. For purposes of calculating rebase growth rates on a
comparable basis for all businesses that we owned during 2023, we
have adjusted our historical revenue, Adjusted EBITDA and Adjusted
EBITDA less P&E Additions for the three months ended March 31,
2022 to (i) include the pre-acquisition revenue, Adjusted EBITDA
and P&E additions to the same extent these entities are
included in our results for the three months ended March 31, 2023,
(ii) exclude from our rebased amounts the revenue, Adjusted EBITDA
and P&E additions of entities disposed of to the same extent
these entities are excluded in our results for the three months
ended March 31, 2023, (iii) include in our rebased amounts the
revenue and costs for the temporary elements of transitional and
other services provided to iliad, Vodafone, Deutsche Telekom and M7
Group, to reflect amounts related to these services equal to those
included in our results for the three months ended March 31, 2023
and (iv) reflect the translation of our rebased amounts at the
applicable average foreign currency exchange rates that were used
to translate our results for the three months ended March 31, 2023.
We have reflected the revenue, Adjusted EBITDA and P&E
additions of these acquired entities in our 2022 rebased amounts
based on what we believe to be the most reliable information that
is currently available to us (generally pre-acquisition financial
statements), as adjusted for the estimated effects of (a) any
significant differences between U.S. GAAP and local generally
accepted accounting principles, (b) any significant effects of
acquisition accounting adjustments, (c) any significant differences
between our accounting policies and those of the acquired entities
and (d) other items we deem appropriate. We do not adjust
pre-acquisition periods to eliminate nonrecurring items or to give
retroactive effect to any changes in estimates that might be
implemented during post-acquisition periods. As we did not own or
operate the acquired businesses during the pre-acquisition periods,
no assurance can be given that we have identified all adjustments
necessary to present the revenue, Adjusted EBITDA and Adjusted
EBITDA less P&E Additions of these entities on a basis that is
comparable to the corresponding post-acquisition amounts that are
included in our results or that the pre-acquisition financial
statements we have relied upon do not contain undetected errors. In
addition, the rebase growth percentages are not necessarily
indicative of the revenue, Adjusted EBITDA and Adjusted EBITDA less
P&E Additions that would have occurred if these transactions
had occurred on the dates assumed for purposes of calculating our
rebased amounts or the revenue, Adjusted EBITDA and Adjusted EBITDA
less P&E Additions that will occur in the future. Investors
should view rebase growth as a supplement to, and not a substitute
for, U.S. GAAP measures of performance included in our condensed
consolidated statements of operations.
The following table provides adjustments made to the 2022
amounts (i) in aggregate for our consolidated reportable segments
and (ii) for the non-consolidated VMO2 JV and VodafoneZiggo JV to
derive our rebased growth rates:
Three months ended March 31,
2022
Revenue
Adjusted EBITDA
Adjusted EBITDA less P&E
Additions
in millions
Consolidated Liberty Global:
Acquisitions and dispositions(i)
$
44.6
$
(4.4
)
$
(10.8
)
Foreign currency
(48.2
)
(15.8
)
(2.1
)
Total
$
(3.6
)
$
(20.2
)
$
(12.9
)
VMO2 JV(ii):
Acquisitions and dispositions(iii)
$
(34.3
)
$
(249.2
)
$
(249.2
)
nexfibre construction revenue(iv)
122.4
12.4
12.4
nexfibre construction P&E
additions(iv)
—
—
84.9
Foreign currency
(320.9
)
(115.3
)
(52.8
)
Total
$
(232.8
)
$
(352.1
)
$
(204.7
)
VodafoneZiggo JV(ii):
Foreign currency
$
(49.4
)
$
(24.0
)
$
(14.4
)
______________________
(i)
In addition to our acquisitions and
dispositions, these rebase adjustments include amounts related to
agreements to provide transitional and other services to iliad,
Vodafone, Deutsche Telekom and M7 Group. These adjustments result
in an equal amount of fees in both the 2023 and 2022 periods for
those services that are deemed to be temporary in nature.
(ii)
Amounts reflect 100% of the adjustments
made related to the VMO2 JV's and the VodafoneZiggo JV's revenue,
Adjusted EBITDA and Adjusted EBITDA less P&E Additions, which
we do not consolidate, as we hold a 50% noncontrolling interest in
the VMO2 JV and the VodafoneZiggo JV.
(iii)
Relates to the exclusion of certain
handset securitization transactions in Q1 2022, including
approximately £32 million ($44 million at the applicable rate) of
revenue and £174 million ($233 million at the applicable rate) of
Adjusted EBITDA related to restructuring of the legacy O2
securitization structure.
(iv)
Relates to the VMO2 JV's construction
agreement with the nexfibre JV. Amounts exclude adjustments for
other service-related benefits attributable to the overall
agreement between the VMO2 JV and the nexfibre JV.
Liquidity
The following table(i) details the U.S. dollar equivalents of
our liquidity position at March 31, 2023, which includes our (i)
cash and cash equivalents, (ii) investments held under SMAs and
(iii) unused borrowing capacity:
Cash
Unused
and Cash
Borrowing
Total
Equivalents
SMAs(ii)
Capacity(iii)
Liquidity
in millions
Liberty Global and unrestricted
subsidiaries
$
339.5
$
2,410.0
$
—
$
2,749.5
Telenet
1,100.6
—
603.3
1,703.9
UPC Holding
5.8
—
775.4
781.2
VM Ireland
0.3
—
108.7
109.0
Total
$
1,446.2
$
2,410.0
$
1,487.4
$
5,343.6
______________________
(i)
Except as otherwise indicated, the amounts
reported in the table include the named entity and its
subsidiaries.
(ii)
Represents investments held under SMAs
which are maintained by investment managers acting as agents on our
behalf.
(iii)
Our aggregate unused borrowing capacity of
$1.5 billion represents maximum undrawn commitments under the
applicable facilities without regard to covenant compliance
calculations or other conditions precedent to borrowing.
Summary of Debt & Finance Lease Obligations
The following table(i) details the March 31, 2023 U.S. dollar
equivalents of the (i) outstanding principal amount of our debt and
finance lease obligations, (ii) expected principal related
derivative cash payments or receipts and (iii) swapped principal
amount of our debt and finance lease obligations:
Finance
Total Debt
Principal Related
Swapped Debt
Lease
& Finance Lease
Derivative
& Finance Lease
Debt(ii)
Obligations
Obligations
Cash Payments
Obligations
in millions
UPC Holding
$
6,347.0
$
22.1
$
6,369.1
$
252.2
$
6,621.3
Telenet
6,024.8
394.5
6,419.3
(116.3
)
6,303.0
VM Ireland
978.3
—
978.3
—
978.3
Other(iii)
1,408.6
34.2
1,442.8
—
1,442.8
Total
$
14,758.7
$
450.8
$
15,209.5
$
135.9
$
15,345.4
______________________
(i)
Except as otherwise indicated, the amounts
reported in the table include the named entity and its
subsidiaries.
(ii)
Debt amounts for UPC Holding include notes
issued by special purpose entities that are consolidated by UPC
Holding.
(iii)
Debt amount includes a loan of $1,367.4
million backed by the shares we hold in Vodafone Group plc.
Property and Equipment Additions and Capital
Expenditures
The table below highlights the categories of property and
equipment additions of our continuing operations for the indicated
periods and reconciles those additions to the capital expenditures
of our continuing operations that are presented in the condensed
consolidated statements of cash flows in our 10-Q.
Three months ended
March 31,
2023
2022
in millions, except %
amounts
Customer premises equipment
$
69.3
$
71.2
New build & upgrade
28.1
22.8
Capacity
56.0
43.8
Baseline
137.0
134.8
Product & enablers
99.5
109.3
Total P&E additions
389.9
381.9
Reconciliation of P&E additions to
capital expenditures:
Assets acquired under capital-related
vendor financing arrangements(i)
(42.3
)
(66.7
)
Assets acquired under finance leases
(7.3
)
(8.7
)
Changes in current liabilities related to
capital expenditures
36.9
66.3
Total capital expenditures, net(ii)
$
377.2
$
372.8
P&E additions as % of revenue
20.9
%
20.6
%
______________________
(i)
Amounts exclude related VAT of $6.7
million and $6.6 million for the three months ended March 31, 2023
and 2022, respectively, that were also financed under these
arrangements.
(ii)
The capital expenditures that we report in
our condensed consolidated statements of cash flows do not include
amounts that are financed under vendor financing or finance lease
arrangements. Instead, these expenditures are reflected as non-cash
additions to our property and equipment when the underlying assets
are delivered, and as repayments of debt when the related principal
is repaid.
ARPU per Fixed Customer Relationship
The following table provides ARPU per fixed customer
relationship and percentage change from period to period on both a
reported and rebased basis for the indicated periods:
ARPU per Fixed Customer
Relationship
Three months ended March
31,
Increase/(decrease)
2023
2022
Reported %
Rebased %
Liberty Global
$
63.80
$
66.47
(4.0
%)
(0.6
%)
Ireland
€
61.70
€
61.02
1.1
%
1.1
%
Belgium (Telenet)
€
59.40
€
58.75
1.1
%
2.0
%
UPC Holding
€
59.13
€
59.28
(0.3
%)
(3.8
%)
Mobile ARPU
The following tables provide ARPU per mobile subscriber and
percentage change from period to period on both a reported and
rebased basis for the indicated periods:
ARPU per Mobile
Subscriber
Three months ended March
31,
Decrease
2023
2022
Reported %
Rebased %
Liberty Global:
Including interconnect revenue
$
25.91
$
26.81
(3.4
%)
(1.6
%)
Excluding interconnect revenue
$
23.68
$
24.10
(1.7
%)
(0.1
%)
Operating Data — March 31,
2023
Homes
Passed
Fixed-Line Customer
Relationships
Internet
Subscribers(i)
Video
Subscribers (ii)
Telephony
Subscribers(iii)
Total
RGUs
Postpaid Mobile
Subscribers
Total Mobile
Subscribers(iv)
Consolidated Liberty Global:
Switzerland(v)
2,675,900
1,499,400
1,190,600
1,239,600
989,600
3,419,800
2,362,300
2,790,600
Belgium
3,443,700
2,004,400
1,737,500
1,684,000
992,700
4,414,200
2,682,400
2,943,000
Ireland
967,500
418,600
381,100
251,800
246,100
879,000
143,000
143,000
Slovakia
638,600
181,200
146,100
164,300
88,900
399,300
—
—
Luxembourg(vi)
146,500
49,900
16,600
43,800
8,500
68,900
2,400
2,400
Total Liberty Global
7,872,200
4,153,500
3,471,900
3,383,500
2,325,800
9,181,200
5,190,100
5,879,000
VMO2 JV
16,171,400
5,816,400
5,682,600
13,003,500
16,066,700
34,081,600
VodafoneZiggo JV(vii)
7,380,100
3,672,700
3,298,500
3,644,600
1,710,300
8,653,400
5,195,400
5,559,500
Subscriber Variance Table —
March 31, 2023 vs. December 31, 2022
Homes
Passed
Fixed-Line Customer
Relationships
Internet
Subscribers(ii)
Video
Subscribers(i)
Telephony
Subscribers(iii)
Total
RGUs
Postpaid Mobile
Subscribers
Total Mobile
Subscribers(iv)
Organic Change
Summary
Consolidated Liberty Global:
Switzerland(v)
4,400
2,300
7,200
(5,600
)
(13,700
)
(12,100
)
36,100
24,400
Belgium
7,000
(13,300
)
(2,100
)
(19,600
)
(19,700
)
(41,400
)
13,100
2,700
Ireland
2,500
(2,500
)
(1,500
)
(8,900
)
(6,100
)
(16,500
)
(800
)
(800
)
Slovakia
700
(1,200
)
(300
)
(600
)
(500
)
(1,400
)
—
—
Luxembourg(vi)
500
(1,800
)
300
(2,200
)
100
(1,800
)
—
—
Total Liberty Global
15,100
(16,500
)
3,600
(36,900
)
(39,900
)
(73,200
)
48,400
26,300
Q1 2023 Liberty
Global Adjustments:
Switzerland
157,700
26,200
—
28,700
—
28,700
—
—
Belgium
—
8,900
8,900
8,900
—
17,800
—
—
Luxembourg(vi)
146,000
51,700
16,300
46,000
8,400
70,700
2,400
2,400
Total adjustments
303,700
86,800
25,200
83,600
8,400
117,200
2,400
2,400
VMO2 JV
26,800
20,900
28,800
(40,000
)
(20,900
)
250,200
VodafoneZiggo JV(vii)
6,800
(3,500
)
(8,500
)
(20,100
)
(76,300
)
(104,900
)
38,500
31,900
Footnotes for Operating Data and Subscriber Variance
Tables
___________________
(i)
In Switzerland, we offer a 10 Mbps
internet service to our Video Subscribers without an incremental
recurring fee. Our Internet Subscribers in Switzerland include
approximately 44,800 subscribers who have requested and received
this service.
(ii)
We have approximately 30,700 “lifeline”
customers that are counted on a per connection basis, representing
the least expensive regulated tier of video service, with only a
few channels.
(iii)
In Switzerland, we offer a basic phone
service to our Video Subscribers without an incremental recurring
fee. Our Telephony Subscribers in Switzerland include approximately
176,400 subscribers who have requested and received this
service.
(iv)
In a number of countries, our mobile
subscribers receive mobile services pursuant to prepaid contracts.
As of March 31, 2023, our mobile subscriber count included
approximately 428,300, 260,600, 7,814,200 and 364,100 prepaid
mobile subscribers in Switzerland, Belgium, the VMO2 JV and the
VodafoneZiggo JV, respectively. Prepaid mobile customers are
excluded from the VMO2 JV's and the VodafoneZiggo JV's mobile
subscriber counts after a period of inactivity of three months and
nine months, respectively. The mobile subscriber count for the VMO2
JV includes IoT connections, which are Machine-to-Machine contract
mobile connections, including Smart Metering contract connections.
The mobile subscriber count presented above for the VMO2 JV
excludes wholesale mobile connections of approximately 10,865,300
that are included in the total mobile subscriber count as defined
and presented by the VMO2 JV.
(v)
Pursuant to service agreements,
Switzerland offers broadband internet, video and telephony services
over networks owned by third-party operators (“partner networks”),
and following the acquisition of Sunrise, also services homes
through Sunrise's existing agreements with Swisscom, Swiss Fibre
Net and local utilities. Under these agreements, RGUs are only
recognized if there is a direct billing relationship with the
customer. Homes passed or serviceable through the above service
agreements are not included in Switzerland's homes passed count as
we do not own these networks. Including these arrangements, our
operations in Switzerland have the ability to offer fixed services
to the national footprint.
(vi)
Relates to our business in Luxembourg as a
result of Telenet's January 2023 acquisition of Eltrona.
(vii)
Fixed subscriber counts for the
VodafoneZiggo JV include B2B subscribers.
Additional General Notes to
Tables:
Most of our broadband communications subsidiaries provide
broadband internet, telephony, data, video or other B2B services.
Certain of our B2B revenue is derived from SOHO subscribers that
pay a premium price to receive enhanced service levels along with
internet, video or telephony services that are the same or similar
to the mass marketed products offered to our residential
subscribers. All mass marketed products provided to SOHOs, whether
or not accompanied by enhanced service levels and/or premium
prices, are included in the respective RGU and customer counts of
our broadband communications operations, with only those services
provided at premium prices considered to be “SOHO RGUs” or “SOHO
customers”. To the extent our existing customers upgrade from a
residential product offering to a SOHO product offering, the number
of SOHO RGUs or SOHO customers will increase, but there is no
impact to our total RGU or customer counts. With the exception of
our B2B SOHO subscribers and mobile subscribers at medium and large
enterprises, we generally do not count customers of B2B services as
customers or RGUs for external reporting purposes.
In Belgium, Telenet leases a portion of its network under a
long-term finance lease arrangement. These tables include operating
statistics for Telenet's owned and leased networks.
While we take appropriate steps to ensure that subscriber
statistics are presented on a consistent and accurate basis at any
given balance sheet date, the variability from country to country
in (i) the nature and pricing of products and services, (ii) the
distribution platform, (iii) billing systems, (iv) bad debt
collection experience and (v) other factors add complexity to the
subscriber counting process. We periodically review our subscriber
counting policies and underlying systems to improve the accuracy
and consistency of the data reported on a prospective basis.
Accordingly, we may from time to time make appropriate adjustments
to our subscriber statistics based on those reviews.
Subscriber information for acquired entities is preliminary and
subject to adjustment until we have completed our review of such
information and determined that it is presented in accordance with
our policies.
Footnotes
1
2023 Distributable Cash Flow guidance
reflects FX rates of EUR/USD 1.07, GBP/USD 1.21, CHF/USD 1.08.
2
Liquidity refers to cash and cash
equivalents and investments held under separately managed accounts
plus the maximum undrawn commitments under subsidiary borrowing
facilities, without regard to covenant compliance calculations or
other conditions precedent to borrowing.
3
Represents aggregate consolidated and 50%
owned non-consolidated VMO2 JV and VodafoneZiggo JV homes passed,
broadband subscribers and postpaid mobile subscribers, as
applicable. Aggregate subscribers also includes certain B2B fixed
subscribers of the VodafoneZiggo JV.
4
The indicated growth rates are rebased for
acquisitions, dispositions, FX and other items that impact the
comparability of our year-over-year results. Please see Rebase
Information for information on rebased growth.
5
Costs to capture generally include
incremental, third-party operating and capital related costs that
are directly associated with integration activities, restructuring
activities and certain other costs associated with aligning an
acquiree to our business processes to derive synergies. These costs
are necessary to combine the operations of a business being
acquired (or joint venture being formed) with ours or are
incidental to the acquisition. As a result, costs to capture may
include certain (i) operating costs that are included in Adjusted
EBITDA, (ii) capital related costs that are included in property
and equipment additions and Adjusted EBITDA less P&E Additions
and (iii) certain integration related restructuring expenses that
are not included within Adjusted EBITDA or Adjusted EBITDA less
P&E Additions. Given the achievement of synergies occurs over
time, certain of our costs to capture are recurring by nature, and
generally incurred within a few years of completing the
transaction.
6
This release includes the actual U.S. GAAP
results for the VMO2 JV for the three months ended March 31, 2023
and 2022. The commentary and YoY growth rates presented in this
release are shown on a rebased basis. For more information
regarding the VMO2 JV, including full IFRS disclosures, please
visit their investor relations page to access the VMO2 JV's Q1
earnings release.
7
The U.S. GAAP YoY growth rates for the
VMO2 JV are impacted by rebase adjustments and recurring U.S. GAAP
to IFRS accounting differences, as further described and reconciled
below.
Three months ended March
31,
2023
2022
in millions
Revenue:
U.S. GAAP revenue
$
3,162.7
$
3,398.0
Rebase adjustments(i)
3.9
88.1
U.S. GAAP rebased revenue
3,166.6
3,486.1
U.S. GAAP/IFRS adjustments
—
—
IFRS rebased revenue
$
3,166.6
$
3,486.1
Adjusted EBITDA:
U.S. GAAP Adjusted EBITDA
$
1,025.9
$
1,395.3
Rebase adjustments(ii)
2.0
(236.8
)
U.S. GAAP rebased Adjusted EBITDA
1,027.9
1,158.5
U.S. GAAP/IFRS adjustments(iv)
101.8
91.6
IFRS rebased Adjusted EBITDA (including
costs to capture)
$
1,129.7
$
1,250.1
Property & equipment
additions:
U.S. GAAP P&E additions
$
590.6
$
659.3
Rebase adjustments(iii)
—
(84.9
)
U.S. GAAP rebased P&E additions
590.6
574.4
U.S. GAAP/IFRS adjustments(iv)
59.1
63.0
IFRS rebased P&E additions (including
costs to capture)
$
649.7
$
637.4
Adjusted EBITDA less P&E
additions:
U.S. GAAP Adjusted EBITDA less P&E
additions
$
435.3
$
736.0
Rebase adjustments(ii)(iii)
2.0
(151.9
)
U.S. GAAP rebased Adjusted EBITDA less
P&E additions
437.3
584.1
U.S. GAAP/IFRS adjustments(iv)
42.7
28.6
IFRS rebased Adjusted EBITDA less P&E
additions (including costs to capture)
$
480.0
$
612.7
______________________
(i)
Revenue rebase adjustments relate to (i)
for 2022, the VMO2 JV's construction agreement with the nexfibre JV
of approximately $122 million, (ii) the exclusion of certain
handset securitization transactions in Q1 2022 of approximately $44
million related to restructuring of the legacy O2 securitization
structure and (iii) certain transaction adjustments made to reflect
the JV's new basis of accounting, which reverse the effect of the
write-off of deferred revenue.
(ii)
Adjusted EBITDA rebase adjustments relate
to (i) the exclusion of certain handset securitization transactions
in Q1 2022 of approximately $233 million related to restructuring
of the legacy O2 securitization structure, (ii) for 2022, the VMO2
JV's construction agreement with the nexfibre JV of approximately
$12 million and (iii) certain transaction adjustments made to
reflect the JV's new basis of accounting, which reverse the effect
of the write-off of deferred commissions, install costs and
deferred revenue.
(iii)
P&E rebase adjustments for 2022 relate
to the VMO2 JV's construction agreement with the nexfibre JV of
approximately $85 million.
(iv)
U.S. GAAP/IFRS differences primarily
relate to (i) the VMO2 JV's investment in CTIL and (ii) lease
accounting.
8 Converged households or converged SIMs represent customers in
either our Consumer or SOHO segment that subscribe to both a
fixed-line digital TV and an internet service and Vodafone and/or
hollandsnieuwe postpaid mobile telephony service. 9 Our aggregate
unused borrowing capacity of $1.5 billion represents the maximum
undrawn commitments under the applicable facilities without regard
to covenant compliance calculations or other conditions precedent
to borrowing. Upon completion of the relevant March 31, 2023
compliance reporting requirements for our credit facilities, and
assuming no further changes from quarter-end borrowing levels, we
anticipate that (i) the full €713.4 million ($775.4 million) of
borrowing capacity will be available under the UPC Holding Bank
Facility, (ii) the full €555.0 million ($603.3 million) of
borrowing capacity will be available under the Telenet Credit
Facility and (iii) the full €100.0 million ($108.7 million) of
borrowing capacity will be available under the VM Ireland Credit
Facility. Our above expectations do not consider any actual or
potential changes to our borrowing levels or any amounts loaned or
distributed subsequent to March 31, 2023. 10 The term "Full
Company" includes certain amounts that were classified as
discontinued operations prior to disposal. We also present Full
Company Adjusted Free Cash Flow and Full Company Distributable Cash
Flow, consistent with the basis for our full year 2023
Distributable Cash Flow guidance. 11 For purposes of calculating
our average tenor, total third-party debt excludes vendor
financing, certain debt obligations that we assumed in connection
with various acquisitions, and liabilities related to Telenet's
acquisition of mobile spectrum licenses. The percentage of debt not
due until 2029 or thereafter includes all of these amounts.
Glossary
10-Q or 10-K: As used herein, the
terms 10-Q and 10-K refer to our most recent quarterly or annual
report as filed with the Securities and Exchange Commission on Form
10-Q or Form 10-K, as applicable.
Adjusted EBITDA, Adjusted EBITDA less
P&E Additions and Property and Equipment Additions (P&E
Additions):
- Adjusted EBITDA: Adjusted EBITDA
is the primary measure used by our chief operating decision maker
to evaluate segment operating performance and is also a key factor
that is used by our internal decision makers to (i) determine how
to allocate resources to segments and (ii) evaluate the
effectiveness of our management for purposes of annual and other
incentive compensation plans. As we use the term, Adjusted EBITDA
is defined as earnings (loss) from continuing operations before net
income tax benefit (expense), other non-operating income or
expenses, net share of results of affiliates, net gains (losses) on
debt extinguishment, net realized and unrealized gains (losses) due
to changes in fair values of certain investments, net foreign
currency transaction gains (losses), net gains (losses) on
derivative instruments, net interest expense, depreciation and
amortization, share-based compensation, provisions and provision
releases related to significant litigation and impairment,
restructuring and other operating items. Other operating items
include (a) gains and losses on the disposition of long-lived
assets, (b) third-party costs directly associated with successful
and unsuccessful acquisitions and dispositions, including legal,
advisory and due diligence fees, as applicable, and (c) other
acquisition-related items, such as gains and losses on the
settlement of contingent consideration. Our internal decision
makers believe Adjusted EBITDA is a meaningful measure because it
represents a transparent view of our recurring operating
performance that is unaffected by our capital structure and allows
management to (1) readily view operating trends, (2) perform
analytical comparisons and benchmarking between segments and (3)
identify strategies to improve operating performance in the
different countries in which we operate. We believe our
consolidated Adjusted EBITDA measure, which is a non-GAAP measure,
is useful to investors because it is one of the bases for comparing
our performance with the performance of other companies in the same
or similar industries, although our measure may not be directly
comparable to similar measures used by other public companies.
Consolidated Adjusted EBITDA should be viewed as a measure of
operating performance that is a supplement to, and not a substitute
for, U.S. GAAP measures of income included in our condensed
consolidated statements of operations.
- Adjusted EBITDA less P&E
Additions: We define Adjusted EBITDA less P&E Additions,
which is a non-GAAP measure, as Adjusted EBITDA less property and
equipment additions on an accrual basis. Adjusted EBITDA less
P&E Additions is a meaningful measure because it provides (i) a
transparent view of Adjusted EBITDA that remains after our capital
spend, which we believe is important to take into account when
evaluating our overall performance and (ii) a comparable view of
our performance relative to other telecommunications companies. Our
Adjusted EBITDA less P&E Additions measure may differ from how
other companies define and apply their definition of similar
measures. Adjusted EBITDA less P&E Additions should be viewed
as a measure of operating performance that is a supplement to, and
not a substitute for, U.S. GAAP measures of income included in our
condensed consolidated statements of operations.
- P&E Additions: Includes
capital expenditures on an accrual basis, amounts financed under
vendor financing or finance lease arrangements and other non-cash
additions. A reconciliation of earnings (loss) from continuing
operations to Adjusted EBITDA and Adjusted EBITDA less P&E
Additions is presented in the following table:
Three months ended
March 31,
2023
2022
in millions
Earnings (loss) from continuing
operations
$
(713.5
)
$
1,075.7
Income tax expense
12.5
81.2
Other income, net
(43.9
)
(11.9
)
Share of results of affiliates, net
238.6
(230.5
)
Realized and unrealized losses due to
changes in fair values of certain investments, net
5.5
93.4
Foreign currency transaction losses
(gains), net
302.9
(575.0
)
Realized and unrealized losses (gains) on
derivative instruments, net
34.4
(508.3
)
Interest expense
200.9
134.2
Operating income
37.4
58.8
Impairment, restructuring and other
operating items, net
16.4
9.4
Depreciation and amortization
526.9
564.7
Share-based compensation expense
43.8
51.4
Adjusted EBITDA
624.5
684.3
Property and equipment additions
(389.9
)
(381.9
)
Adjusted EBITDA less P&E Additions
$
234.6
$
302.4
Adjusted EBITDA after leases (Adjusted
EBITDAaL): We define Adjusted EBITDAaL as Adjusted EBITDA as
further adjusted to include finance lease related depreciation and
interest expense. Our internal decision makers believe Adjusted
EBITDAaL is a meaningful measure because it represents a
transparent view of our recurring operating performance that
includes recurring lease expenses necessary to operate our
business. We believe Adjusted EBITDAaL, which is a non-GAAP
measure, is useful to investors because it is one of the bases for
comparing our performance with the performance of other companies
in the same or similar industries, although our measure may not be
directly comparable to similar measures used by other public
companies. Adjusted EBITDAaL should be viewed as a measure of
operating performance that is a supplement to, and not a substitute
for, U.S. GAAP measures of income included in our condensed
consolidated statements of operations.
Adjusted Free Cash Flow (Adjusted FCF)
& Distributable Cash Flow:
- Adjusted FCF: We define Adjusted FCF as net cash provided by
the operating activities of our continuing operations, plus
operating-related vendor financed expenses (which represents an
increase in the period to our actual cash available as a result of
extending vendor payment terms beyond normal payment terms, which
are typically 90 days or less, through non-cash financing
activities), less (i) cash payments in the period for capital
expenditures, (ii) principal payments on operating- and
capital-related amounts financed by vendors and intermediaries
(which represents a decrease in the period to our actual cash
available as a result of paying amounts to vendors and
intermediaries where we previously had extended vendor payments
beyond the normal payment terms), and (iii) principal payments on
finance leases (which represents a decrease in the period to our
actual cash available), each as reported in our condensed
consolidated statements of cash flows with each item excluding any
cash provided or used by our discontinued operations. Net cash
provided by operating activities includes cash paid for third-party
costs directly associated with successful and unsuccessful
acquisition and dispositions of $11.6 million and $13.4 million
during the three months ended March 31, 2023 and 2022,
respectively.
- Distributable Cash Flow: We define
Distributable Cash Flow as Adjusted FCF plus any dividends received
from our equity affiliates that are funded by activities outside of
their normal course of operations, including, for example, those
funded by recapitalizations (referred to as “Other Affiliate
Dividends”).
We believe our presentation of Adjusted FCF and Distributable
Cash Flow, each of which is a non-GAAP measure, provides useful
information to our investors because these measures can be used to
gauge our ability to (i) service debt and (ii) fund new investment
opportunities after consideration of all actual cash payments
related to our working capital activities and expenses that are
capital in nature, whether paid inside normal vendor payment terms
or paid later outside normal vendor payment terms (in which case we
typically pay in less than 365 days). Adjusted FCF and
Distributable Cash Flow should not be understood to represent our
ability to fund discretionary amounts, as we have various mandatory
and contractual obligations, including debt repayments, that are
not deducted to arrive at these amounts. Investors should view
Adjusted FCF and Distributable Cash Flow as supplements to, and not
substitutes for, U.S. GAAP measures of liquidity included in our
condensed consolidated statements of cash flows. Further, our
Adjusted FCF and Distributable Cash Flow may differ from how other
companies define and apply their definition of Adjusted FCF or
other similar measures. Consistent with the basis for our full year
2023 Distributable Cash Flow guidance, the following table provides
a reconciliation of our Full Company net cash provided by operating
activities to Full Company Adjusted FCF and Full Company
Distributable Cash Flow for the indicated periods.
Three months ended
March 31,
2023
2022
in millions
Net cash provided by operating
activities
$
307.8
$
656.7
Operating-related vendor financing
additions(i)
141.4
140.2
Cash capital expenditures, net
(377.2
)
(388.6
)
Principal payments on operating-related
vendor financing
(143.5
)
(211.7
)
Principal payments on capital-related
vendor financing
(104.5
)
(41.4
)
Principal payments on finance leases
(2.4
)
(18.0
)
Full Company Adjusted FCF
(178.4
)
137.2
Other affiliate dividends
198.3
—
Full Company Distributable Cash Flow
$
19.9
$
137.2
_______________
(i)
For purposes of our condensed consolidated
statements of cash flows, operating-related vendor financing
additions represent operating-related expenses financed by an
intermediary that are treated as constructive operating cash
outflows and constructive financing cash inflows when the
intermediary settles the liability with the vendor. When we pay the
financing intermediary, we record financing cash outflows in our
condensed consolidated statements of cash flows. For purposes of
our Adjusted FCF definition, we (i) add in the constructive
financing cash inflow when the intermediary settles the liability
with the vendor as our actual net cash available at that time is
not affected and (ii) subsequently deduct the related financing
cash outflow when we actually pay the financing intermediary,
reflecting the actual reduction to our cash available to service
debt or fund new investment opportunities.
ARPU: Average Revenue Per Unit is
the average monthly subscription revenue per average fixed customer
relationship or mobile subscriber, as applicable. ARPU per average
fixed-line customer relationship is calculated by dividing the
average monthly subscription revenue from residential fixed and
SOHO services by the average number of fixed-line customer
relationships for the period. ARPU per average mobile subscriber is
calculated by dividing mobile subscription revenue for the
indicated period by the average number of mobile subscribers for
the period. Unless otherwise indicated, ARPU per fixed customer
relationship or mobile subscriber is not adjusted for currency
impacts. ARPU per RGU refers to average monthly revenue per average
RGU, which is calculated by dividing the average monthly
subscription revenue from residential and SOHO services for the
indicated period, by the average number of the applicable RGUs for
the period. Unless otherwise noted, ARPU in this release is
considered to be ARPU per average fixed customer relationship or
mobile subscriber, as applicable. Fixed-line customer
relationships, mobile subscribers and RGUs of entities acquired
during the period are normalized. In addition, for purposes of
calculating the percentage change in ARPU on a rebased basis, which
is a non-GAAP measure, we adjust the prior-year subscription
revenue, fixed-line customer relationships, mobile subscribers and
RGUs, as applicable, to reflect acquisitions, dispositions and FX
on a comparable basis with the current year, consistent with how we
calculate our rebased growth for revenue and Adjusted EBITDA, as
further described in the body of this release.
ARPU per Mobile Subscriber: Our
ARPU per mobile subscriber calculation that excludes interconnect
revenue refers to the average monthly mobile subscription revenue
per average mobile subscriber and is calculated by dividing the
average monthly mobile subscription revenue (excluding handset
sales and late fees) for the indicated period, by the average of
the opening and closing balances of mobile subscribers in service
for the period. Our ARPU per mobile subscriber calculation that
includes interconnect revenue increases the numerator in the
above-described calculation by the amount of mobile interconnect
revenue during the period.
Blended, fully-swapped debt borrowing
cost: The weighted average interest rate on our aggregate
variable- and fixed-rate indebtedness (excluding finance leases and
including vendor financing obligations), including the effects of
derivative instruments, original issue premiums or discounts and
commitment fees, but excluding the impact of financing costs.
B2B: Business-to-Business.
Customer Churn: The rate at which
customers relinquish their subscriptions. The annual rolling
average basis is calculated by dividing the number of disconnects
during the preceding 12 months by the average number of customer
relationships. For the purpose of computing churn, a disconnect is
deemed to have occurred if the customer no longer receives any
level of service from us and is required to return our equipment. A
partial product downgrade, typically used to encourage customers to
pay an outstanding bill and avoid complete service disconnection,
is not considered to be disconnected for purposes of our churn
calculations. Customers who move within our footprint and upgrades
and downgrades between services are also excluded from the
disconnect figures used in the churn calculation.
Debt and Net Debt Ratios: Our debt
and net debt ratios, which are non-GAAP metrics, are defined as
total debt and net debt, respectively, divided by reported net loss
for the last twelve months (reported LTM net loss) and Adjusted
EBITDA for the last twelve months (LTM Adjusted EBITDA). Net debt
is defined as total debt less cash and cash equivalents and
investments held under SMAs. For purposes of these calculations,
debt is measured using swapped foreign currency rates, consistent
with the covenant calculation requirements of our subsidiary debt
agreements. The following table details the calculation of our debt
and net debt to reported LTM net loss and LTM Adjusted EBITDA
ratios as of and for the twelve months ended March 31, 2023 (in
millions, except ratios):
Reconciliation of reported LTM net loss
to LTM Adjusted EBITDA:
Reported LTM net loss
$
(683.9
)
Income tax expense
250.2
Other income, net
(166.4
)
Gain on Telenet Tower Sale
(700.5
)
Share of results of affiliates, net
1,736.9
Gain on debt extinguishment, net
(2.8
)
Realized and unrealized loss due to
changes in fair values of certain investments, net
214.0
Foreign currency transaction gain, net
(529.3
)
Realized and unrealized gain on derivative
instruments, net
(648.8
)
Interest expense
656.0
Operating income
125.4
Impairment, restructuring and other
operating items, net
92.1
Depreciation and amortization
2,133.6
Share-based compensation expense
182.3
LTM Adjusted EBITDA
$
2,533.4
Debt to reported LTM net loss and LTM
Adjusted EBITDA:
Debt and finance lease obligations before
deferred financing costs, discounts and premiums
$
15,209.5
Principal related projected derivative
cash receipts
135.9
Vodafone Collar Loan
(1,367.4
)
Adjusted debt and finance lease
obligations before deferred financing costs, discounts and
premiums
$
13,978.0
Reported LTM net loss
$
(683.9
)
Debt to reported LTM net loss ratio
(20.4
)
LTM Adjusted EBITDA
$
2,533.4
Debt to LTM Adjusted EBITDA ratio
5.5
Net Debt to reported LTM net loss and
LTM Adjusted EBITDA:
Adjusted debt and finance lease
obligations before deferred financing costs, discounts and
premiums
$
13,978.0
Cash and cash equivalents and investments
held under SMAs
(3,856.2
)
Adjusted net debt and finance lease
obligations before deferred financing costs, discounts and
premiums
$
10,121.8
Reported LTM net loss
$
(683.9
)
Net debt to reported LTM net loss
ratio
(14.8
)
LTM Adjusted EBITDA
$
2,533.4
Net debt to LTM Adjusted EBITDA ratio
4.0
Fixed-Line Customer Relationships:
The number of customers who receive at least one of our internet,
video or telephony services that we count as RGUs, without regard
to which or to how many services they subscribe. Fixed-Line
Customer Relationships generally are counted on a unique premises
basis. Accordingly, if an individual receives our services in two
premises (e.g., a primary home and a vacation home), that
individual generally will count as two Fixed-Line Customer
Relationships. We exclude mobile-only customers from Fixed-Line
Customer Relationships.
Fixed-Mobile Convergence (FMC):
Fixed-mobile convergence penetration represents the number of
customers who subscribe to both a fixed broadband internet service
and postpaid mobile telephony service, divided by the total number
of customers who subscribe to our fixed broadband internet
service.
Homes Passed: Homes, residential
multiple dwelling units or commercial units that can be connected
to our networks without materially extending the distribution
plant. Certain of our Homes Passed counts are based on census data
that can change based on either revisions to the data or from new
census results.
Internet Subscriber: A home,
residential multiple dwelling unit or commercial unit that receives
internet services over our networks, or that we service through a
partner network.
Lightning Premises: Includes homes,
residential multiple dwelling units and commercial premises that
potentially could subscribe to our residential or SOHO services,
which have been connected to the VMO2 JV's networks in the U.K. and
Ireland as a part of the Project Lightning network extension
program. Project Lightning infill build relates to construction in
areas adjacent to our existing network.
Mobile Subscriber Count: For
residential and business subscribers, the number of active SIM
cards in service rather than services provided. For example, if a
mobile subscriber has both a data and voice plan on a smartphone
this would equate to one mobile subscriber. Alternatively, a
subscriber who has a voice and data plan for a mobile handset and a
data plan for a laptop would be counted as two mobile subscribers.
Customers who do not pay a recurring monthly fee are excluded from
our mobile telephony subscriber counts after periods of inactivity
ranging from 30 to 90 days, based on industry standards within the
respective country. In a number of countries, our mobile
subscribers receive mobile services pursuant to prepaid
contracts.
MVNO: Mobile Virtual Network
Operator.
RGU: A Revenue Generating Unit is
separately an Internet Subscriber, Video Subscriber or Telephony
Subscriber. A home, residential multiple dwelling unit, or
commercial unit may contain one or more RGUs. For example, if a
residential customer subscribed to our broadband internet service,
video service and fixed-line telephony service, the customer would
constitute three RGUs. Total RGUs is the sum of Internet, Video and
Telephony Subscribers. RGUs generally are counted on a unique
premises basis such that a given premise does not count as more
than one RGU for any given service. On the other hand, if an
individual receives one of our services in two premises (e.g., a
primary home and a vacation home), that individual will count as
two RGUs for that service. Each bundled internet, video or
telephony service is counted as a separate RGU regardless of the
nature of any bundling discount or promotion. Non-paying
subscribers are counted as subscribers during their free
promotional service period. Some of these subscribers may choose to
disconnect after their free service period. Services offered
without charge on a long-term basis (e.g., VIP subscribers or free
service to employees) generally are not counted as RGUs. We do not
include subscriptions to mobile services in our externally reported
RGU counts. In this regard, our RGU counts exclude our separately
reported postpaid and prepaid mobile subscribers.
SIM: Subscriber Identification
Module.
SOHO: Small or Home Office
Subscribers.
Telephony Subscriber: A home,
residential multiple dwelling unit or commercial unit that receives
voice services over our networks, or that we service through a
partner network. Telephony Subscribers exclude mobile telephony
subscribers.
U.S. GAAP: Accounting principles
generally accepted in the United States.
Video Subscriber: A home,
residential multiple dwelling unit or commercial unit that receives
our video service over our broadband network or through a partner
network.
YoY: Year-over-year.
Appendix - Supplemental Tech Framework Information
During the first quarter of 2023, we changed the terms related
to, and approach to how we reflect the allocation of, charges for
certain products and services that our centrally-managed technology
and innovation function (our T&I Function) provide to our
consolidated reportable segments (the Tech Framework). These
products and services include CPE hardware and related essential
software, maintenance, hosting and other services. As a result, our
consolidated reportable segments now capitalize the combined cost
of the CPE hardware and essential software as property and
equipment additions. The other services, including maintenance and
hosting, continue to be reported as operating costs in the period
incurred (included in our Adjusted EBITDA). The corresponding
amounts charged by our T&I Function are reflected as revenue
when earned. The new Tech Framework is a result of internal changes
with respect to the way in which our chief operating decision maker
evaluates the revenue, Adjusted EBITDA and property and equipment
additions of our consolidated reportable segments. Segment
information has been revised, as applicable, to reflect these
changes. The following table provides a summary of the impact on
the revenue, Adjusted EBITDA and property and equipment additions
of our consolidated reportable segments and Central and Other.
Three months ended
March 31,
2023
2022
in millions
Increase (decrease) to
revenue(i):
Central and Other
$
57.4
$
60.0
Intersegment eliminations
(57.4
)
(60.0
)
Total
$
—
$
—
Increase (decrease) to Adjusted
EBITDA(ii):
Switzerland
$
(15.7
)
$
(10.4
)
Belgium
(2.2
)
(2.3
)
Ireland
(5.9
)
(3.8
)
Central and Other
38.8
32.2
Intersegment eliminations
(15.0
)
(15.7
)
Total
$
—
$
—
Increase (decrease) to property and
equipment additions(iii):
Switzerland
$
5.5
$
5.8
Belgium
6.9
7.2
Ireland
2.6
2.7
Central and Other
—
—
Intersegment eliminations
(15.0
)
(15.7
)
Total
$
—
$
—
______________________
(i)
Amounts reflect the revenue recognized
within our T&I Function, as well as any applicable markup
related to the Tech Framework.
(ii)
Amounts reflect the charge to each
respective consolidated reportable segment related to the service
and maintenance component of the Tech Framework and additionally,
for Central and Other, the Adjusted EBITDA impact of the value
attributed to centrally-held internally developed technology that
is embedded within our various CPE, as well as any applicable
markup.
(iii)
Amounts reflect the charge to each
respective consolidated reportable segment related to the value
attributed to centrally-held internally developed technology that
is embedded within our various CPE, as well as any applicable
markup.
Appendix - Supplemental Adjusted EBITDAaL Information
The following table presents (i) Adjusted EBITDA, (ii) finance
lease-related depreciation and interest expense adjustments, (iii)
Adjusted EBITDAaL and (iv) the percentage change from period to
period for Adjusted EBITDA and Adjusted EBITDAaL on both a reported
and rebased basis for each of our reportable segments.
Three months ended
Increase/(decrease)
March 31,
2023
2022(i)
Reported %
Rebased %
in millions, except %
amounts
Adjusted EBITDA:
Switzerland
$
263.0
$
290.8
(9.6
)
(9.2
)
Belgium
302.9
338.1
(10.4
)
(4.0
)
Ireland
41.5
47.1
(11.9
)
(8.0
)
Central and Other
32.1
24.8
29.4
11.5
Intersegment eliminations(ii)
(15.0
)
(16.5
)
N.M.
N.M.
Total Adjusted EBITDA
$
624.5
$
684.3
(8.7
)
(6.0
)
VMO2 JV(iii)
$
1,025.9
$
1,395.3
(26.5
)
(1.7
)
VodafoneZiggo JV(iii)
$
471.5
$
537.8
(12.3
)
(8.2
)
Finance lease adjustments:
Switzerland
$
(1.2
)
$
(0.8
)
Belgium
(20.3
)
(20.2
)
Central and Other
(2.0
)
(2.0
)
Total finance lease adjustments
$
(23.5
)
$
(23.0
)
VMO2 JV(iii)
$
(2.1
)
$
(2.4
)
VodafoneZiggo JV(iii)
$
(2.4
)
$
(2.5
)
Adjusted EBITDAaL:
Switzerland
$
261.8
$
290.0
(9.7
)
(9.2
)
Belgium
282.6
317.9
(11.1
)
(4.3
)
Ireland
41.5
47.1
(11.9
)
(8.0
)
Central and Other
30.1
22.8
32.0
12.1
Intersegment eliminations(ii)
(15.0
)
(16.5
)
N.M.
N.M.
Total Adjusted EBITDAaL
$
601.0
$
661.3
(9.1
)
(6.2
)
VMO2 JV(iii)
$
1,023.8
$
1,392.9
(26.5
)
(11.4
)
VodafoneZiggo JV(iii)
$
469.1
$
535.3
(12.4
)
(8.2
)
______________________
N.M. - Not Meaningful (i)
Amounts have been revised, as applicable,
to reflect the retrospective impact of the Tech Framework, as
described above.
(ii)
Amounts relate to (a) the Adjusted EBITDA
impact to Central and Other of the value attributed to
centrally-held internally developed technology that is embedded
within our various CPE, as well as any applicable markup, and (b)
for three months ended March 31, 2022, transactions between our
continuing and discontinued operations.
(iii)
Amounts reflect 100% of the 50:50
non-consolidated VMO2 JV and VodafoneZiggo JV.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230509006048/en/
Investor Relations Michael Bishop +44 20 8483 6246 Amy
Ocen +1 303 784 4528 Michael Khehra +44 78 9005 0979
Corporate Communications Bill Myers +1 303 220 6686 Matt
Beake +44 20 8483 6428
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