England and Wales | 001-35961 | 98-1112770 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification #) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Class A ordinary shares | LBTYA | Nasdaq Global Select Market |
Class B ordinary shares | LBTYB | Nasdaq Global Select Market |
Class C ordinary shares | LBTYK | Nasdaq Global Select Market |
LIBERTY GLOBAL PLC | ||
By: | /s/ RANDY L. LAZZELL | |
Randy L. Lazzell | ||
Vice President |
Liberty Global Reports First Quarter 2019 Results | |||||||
Vodafone and Sunrise transactions remain on track to close during the summer of 2019 and Q4 2019, respectively Recently closed the sale of our DTH business in CEE for €180 million Q1 2019 continuing operations operating income down 10% to $106 million Confirming all 2019 guidance targets Denver, Colorado: May 6, 2019 Liberty Global plc today announced its Q1 2019 financial results. Our operations in Germany, Hungary, Romania and the Czech Republic, along with our DTH business and our former operation in Austria (collectively, the "Discontinued Operations") have been accounted for as discontinued operations. UPC Switzerland will continue to be included in our continuing operations until the pending sale transaction is approved by Sunrise's shareholders. Unless otherwise indicated, the information in this release relates only to our continuing operations. CEO Mike Fries stated, "A year ago we announced the sale of our operations in Germany, Hungary, Romania and the Czech Republic to Vodafone, which represents the largest divestiture in company history. Since deal announcement we have crossed a number of key milestones and the European Commission is currently in the final stages of its review. We are confident that we remain on track for a successful completion of this transaction during the summer. With respect to the sale of UPC Switzerland to Sunrise, the Swiss Competition Authority is now reviewing the case having received formal notification and we anticipate regulatory approval in the fourth quarter. And finally, we are pleased to announce that the sale of our Eastern European DTH business was completed in early May. We will provide updates in due course regarding our capital allocation decisions with the total proceeds from these transactions. | Continuing Operations (Including Switzerland) | Q1 2019 | |||||
Net Adds | 25,000 | ||||||
Revenue Growth1 | (0.6 | )% | |||||
OCF Growth1 | (0.5 | )% | |||||
Cash Flows From: | |||||||
Operating Activities | $306 mm | ||||||
Investing Activities | $(368) mm | ||||||
Financing Activities | $(738) mm | ||||||
OFCF Growth1 | 74 | % | |||||
Adjusted FCF | $(625) mm | ||||||
P&E Additions | $699 mm | ||||||
Continuing Operations (Excluding Switzerland)2 | Q1 2019 | ||||||
Net Adds | 68,000 | ||||||
Revenue Growth1 | (0.2 | )% | |||||
OCF Growth1 | 0.8 | % | |||||
OFCF Growth1 | 162 | % | |||||
Adjusted FCF3 | $(622) mm | ||||||
P&E Additions | $640 mm | ||||||
2019 Guidance Targets4 (Excluding Switzerland)2 | |||||||
OCF Growth1 | Flat to Down | ||||||
Adjusted FCF3 | $550 mm to $600 mm | ||||||
P&E Additions | ~$2.7 bn | ||||||
NASDAQ: LBTYA | LBTYB | LBTYK |
"From an operating perspective, Virgin Media continued to deliver improved subscriber trends. During the first quarter, Virgin Media delivered nearly 60,000 RGU additions, a 32% year-over-year improvement driven by 26,000 new customer relationships. On the innovation front, we are pushing the envelope in the U.K. In April, we rolled out compelling new fixed-mobile converged bundles, boosted our top broadband speed to 500 Mbps and launched Intelligent WiFi, a cloud-based adaptive system that's designed to significantly improve our customers' in-home WiFi experience. Our Q1 ARPU performance at Virgin Media was impacted by lower install and telephony usage revenue, the timing of certain PPV events and increased promotions in response to market dynamics. However, our competitive position remains strong and we continue to extend our reach with Project Lightning, where we are building 400,000-500,000 new premises every year. | In Switzerland, we are seeing emerging green shoots from our multi-faceted turnaround plan. Our Horizon 4 set-top box rollout is in full-swing with 130,000 boxes installed to date. Customer reception has been very strong with NPS scores materially higher than our legacy product. We also revamped our fixed-line bundles and boosted our top broadband speed to 600 Mbps. On the mobile front, we are beginning to harvest the benefits from our recent MVNO switch as we added 13,000 subscribers in the quarter, which represents our best Q1 ever. As forecasted, we continue to see substantial declines in capital intensity with Q1 property and equipment additions lowered by approximately 30% year-over-year. As a result, our operating free cash flow performance nearly doubled from the prior-year period. We will be hosting an earnings call tomorrow morning at 9:00 a.m. EDT to discuss our first quarter results. We hope you can join us." | |
Contacts Investor Relations Matt Coates +44 20 8483 6333 John Rea +1 303 220 4238 Stefan Halters +44 20 8483 6211 Corporate Communications Molly Bruce +1 303 220 4202 Matt Beake +44 20 8483 6428 Corporate Website www.libertyglobal.com | About Liberty Global Liberty Global (NASDAQ: LBTYA, LBTYB and LBTYK) is the world’s largest international TV and broadband company, with operations in 10 European countries under the consumer brands Virgin Media, Unitymedia, Telenet and UPC. We invest in the infrastructure and digital platforms that empower our customers to make the most of the video, internet and communications revolution. Our substantial scale and commitment to innovation enable us to develop market-leading products delivered through next-generation networks that connect 21 million customers subscribing to 45 million TV, broadband internet and telephony services. We also serve 6 million mobile subscribers.* In addition, Liberty Global owns 50% of VodafoneZiggo, a joint venture in the Netherlands with 4 million customers subscribing to 10 million fixed-line and 5 million mobile services, as well as significant investments in ITV, All3Media, ITI Neovision, LionsGate, the Formula E racing series and several regional sports networks. |
Liberty Global (continuing operations) | Q1 2019 | YoY Growth(i) | |||||
Subscribers | |||||||
Organic RGU Net Additions | 24,700 | ||||||
Organic RGU Net Additions excluding Switzerland | 67,600 | ||||||
Financial (in USD millions) | |||||||
Revenue | |||||||
Continuing operations | $ | 2,868.0 | (0.6 | %) | |||
Continuing operations excluding Switzerland | (0.2 | %) | |||||
Operating income | $ | 105.5 | (10.3 | %) | |||
OCF: | |||||||
Continuing operations | $ | 1,183.3 | (0.5 | %) | |||
Continuing operations excluding Switzerland | 0.8 | % | |||||
Cash provided by operating activities | $ | 306.3 | |||||
Cash used by investing activities | $ | (367.7 | ) | ||||
Cash used by financing activities | $ | (737.5 | ) | ||||
Adjusted FCF: | |||||||
Continuing operations | $ | (624.5 | ) | ||||
Pro forma continuing operations(ii) | $ | (622.1 | ) |
(i) | Revenue and OCF YoY growth rates are on a rebased basis |
(ii) | Pro forma Adjusted FCF gives pro forma effect to certain adjustments to our recurring cash flows that we have or expect to realize following the disposition of the remaining Discontinued Operations and the Switzerland Disposal Group2. For additional details, see the information and reconciliation included within the Glossary |
Three months ended | ||||||
March 31, | ||||||
2019 | 2018 | |||||
Organic RGU net additions (losses) by product | ||||||
Video | (60,500 | ) | (45,200 | ) | ||
Data | 42,400 | 30,500 | ||||
Voice | 42,800 | 4,400 | ||||
Total | 24,700 | (10,300 | ) | |||
Organic RGU net additions (losses) by market | ||||||
U.K./Ireland | 59,200 | 44,900 | ||||
Belgium | (35,700 | ) | (25,200 | ) | ||
Switzerland | (42,900 | ) | (43,700 | ) | ||
Continuing CEE (Poland and Slovakia) | 44,100 | 13,700 | ||||
Total | 24,700 | (10,300 | ) | |||
Organic Mobile SIM additions (losses) by product | ||||||
Postpaid | 72,300 | 113,100 | ||||
Prepaid | (45,500 | ) | (49,400 | ) | ||
Total | 26,800 | 63,700 | ||||
Organic Mobile SIM additions (losses) by market | ||||||
U.K./Ireland | (6,700 | ) | 25,200 | |||
Belgium9 | 20,900 | 31,800 | ||||
Other | 12,600 | 6,700 | ||||
Total | 26,800 | 63,700 |
• | Cable Product Performance: During Q1 we added 25,000 RGUs, as compared to a loss of 10,000 RGUs in the prior-year period, as an improved performance in our CEE operations, at Virgin Media and in Switzerland was partially offset by weakness in Belgium. From a product perspective, voice and data adds showed a year-over-year increase, while video losses accelerated year-over-year |
• | U.K./Ireland: Q1 RGU additions of 59,000 represents a 32% increase over the prior-year period, driven by success in our Project Lightning footprint |
• | Belgium: RGU attrition of 36,000 in Q1 was primarily due to intensified competition |
• | Switzerland: Lost 43,000 RGUs in Q1, compared to a loss of 44,000 in Q1 2018, primarily due to continued intense competition |
• | Continuing CEE (Poland and Slovakia): Gained 44,000 RGUs in Q1, as compared to 14,000 added in the prior-year period, driven by stronger broadband, voice and video adds in Poland |
• | Mobile: Added 27,000 mobile subscribers in Q1, as 72,000 postpaid additions were only partially offset by continued attrition in our low-ARPU prepaid base |
◦ | Q1 U.K/Ireland postpaid mobile net additions of 26,000 were offset by low-ARPU prepaid losses, resulting in a net loss of 7,000 mobile subscriptions; 4G subscriptions now represent 81% of our postpaid base |
◦ | Belgium added 21,000 mobile subscribers during Q1 |
◦ | Switzerland added 13,000 mobile subscribers in Q1, driven by bundling success and a revamped mobile offer following our MVNO switch to Swisscom's network |
Three months ended | Increase/(decrease) | |||||||||||||
March 31, | ||||||||||||||
Revenue | 2019 | 2018 | % | Rebased % | ||||||||||
in millions, except % amounts | ||||||||||||||
Continuing operations: | ||||||||||||||
U.K./Ireland | $ | 1,661.3 | $ | 1,778.2 | (6.6 | ) | (0.1 | ) | ||||||
Belgium | 711.9 | 759.6 | (6.3 | ) | (0.6 | ) | ||||||||
Switzerland | 316.0 | 344.9 | (8.4 | ) | (3.7 | ) | ||||||||
Continuing CEE | 119.1 | 129.5 | (8.0 | ) | 2.2 | |||||||||
Central and Corporate | 60.7 | 52.7 | 15.2 | (1.1 | ) | |||||||||
Intersegment eliminations | (1.0 | ) | (1.4 | ) | N.M. | N.M. | ||||||||
Total continuing operations | $ | 2,868.0 | $ | 3,063.5 | (6.4 | ) | (0.6 | ) | ||||||
Total continuing operations excluding Switzerland | (0.2 | ) | ||||||||||||
Discontinued Operations(i): | ||||||||||||||
Germany | $ | 699.2 | $ | 782.8 | (10.7 | ) | (3.3 | ) | ||||||
Austria | — | 109.7 | (100.0 | ) | — | |||||||||
Discontinued CEE | 188.4 | 201.3 | (6.4 | ) | 2.9 | |||||||||
Intersegment eliminations | (1.2 | ) | (1.2 | ) | N.M. | N.M. | ||||||||
Total Discontinued Operations | $ | 886.4 | $ | 1,092.6 | (18.9 | ) | (2.1 | ) | ||||||
• | Reported revenue for the three months ended March 31, 2019 decreased 6.4% year-over-year |
◦ | The Q1 results were primarily driven by the impact of (i) negative foreign exchange ("FX") movements, mainly related to the weakening of the British Pound and Euro against the U.S. dollar, and (ii) organic revenue contraction |
• | Rebased revenue declined 0.6% during Q1. This result included the favorable impact of a $4.1 million revenue reversal recorded during the first quarter of 2018 |
• | U.K./Ireland: Rebased revenue decrease of 0.1% in Q1 driven by the net effect of (i) a decrease in residential mobile revenue driven by lower volume of handset sales offsetting the revenue benefit of an increase in mobile subscribers in Ireland, (ii) an increase in residential cable revenue due to higher subscription revenue driven by increased subscriber growth and (iii) higher B2B revenue due to an increase in internet SOHO subscribers |
• | Belgium: Rebased revenue decline of 0.6% in Q1 driven by the net effect of (i) an increase in B2B revenue due to an increase in SOHO subscribers, (ii) a decrease in residential cable revenue due to decreases in cable non-subscription revenue from lower sales of equipment and cable sub revenue due to lower subscribers and (iii) a decrease in residential mobile revenue due to a decrease in mobile ARPU |
• | Switzerland: Rebased revenue declined 3.7% in Q1, primarily due to the net effect of (i) a decrease in lower residential cable subscription revenue, which was primarily driven by lower average subscriber levels, (ii) an increase in mobile revenue and (iii) higher B2B revenue |
• | Continuing CEE (Poland and Slovakia): Rebased revenue increased 2.2% in Q1 driven by (i) growth in our B2B business and (ii) an increase in residential cable subscription revenue driven by new build areas |
• | Central and Corporate: Rebased revenue decreased 1.1% in Q1 due largely to lower-margin sales of customer premises equipment to the VodafoneZiggo JV, which began in the second quarter of 2018 |
• | Operating income was $105.5 million and $117.6 million in Q1 2019 and Q1 2018, respectively, representing a decrease of 10.3% year-over-year. |
• | The decrease in operating income resulted from the net effect of (i) a decrease in depreciation and amortization expense, (ii) lower OCF, as further described below, (iii) an increase in share-based compensation expense and (iv) an increase in impairment, restructuring and other operating items, net. |
Three months ended | Increase/(decrease) | |||||||||||||
March 31, | ||||||||||||||
OCF | 2019 | 2018 | % | Rebased % | ||||||||||
in millions, except % amounts | ||||||||||||||
Continuing operations: | ||||||||||||||
U.K./Ireland | $ | 708.3 | $ | 762.6 | (7.1 | ) | (0.7 | ) | ||||||
Belgium | 339.0 | 357.6 | (5.2 | ) | 2.2 | |||||||||
Switzerland | 163.1 | 186.5 | (12.5 | ) | (7.4 | ) | ||||||||
Continuing CEE | 57.2 | 62.3 | (8.2 | ) | 2.0 | |||||||||
Central and Corporate | (85.7 | ) | (107.1 | ) | 20.0 | 4.2 | ||||||||
Intersegment eliminations | 1.4 | (0.2 | ) | N.M. | N.M. | |||||||||
Total continuing operations | $ | 1,183.3 | $ | 1,261.7 | (6.2 | ) | (0.5 | ) | ||||||
Total continuing operations excluding Switzerland | 0.8 | |||||||||||||
Discontinued Operations(i): | ||||||||||||||
Germany | $ | 438.5 | $ | 492.1 | (10.9 | ) | (3.5 | ) | ||||||
Austria | — | 58.8 | (100.0 | ) | — | |||||||||
Discontinued CEE | 70.8 | 76.8 | (7.8 | ) | 1.3 | |||||||||
Intersegment eliminations | 7.6 | 9.5 | N.M. | N.M. | ||||||||||
Total Discontinued Operations | $ | 516.9 | $ | 637.2 | (18.9 | ) | (2.6 | ) |
(i) | For information concerning our discontinued operations, see note 2. |
• | Reported OCF for the three months ended March 31, 2019 decreased 6.2% year-over-year |
◦ | This result was primarily driven by the aforementioned revenue decline |
• | Rebased OCF decline of 0.5% in Q1 included: |
◦ | Unfavorable network tax increase of $5.5 million following an increase in the rateable value of our existing U.K. networks, which is being phased in over a six-year period ending in 2022 |
◦ | The aforementioned favorable impact of a revenue reversal recorded in Switzerland during the first quarter of 2018 |
• | As compared to the prior-year period, our Q1 2019 OCF margin was up 10 basis points to 41.3% |
• | U.K./Ireland: Rebased OCF contraction of 0.7% was primarily attributable to the aforementioned revenue performance, increased programming costs and higher network taxes |
• | Belgium: Rebased OCF growth of 2.2%, largely driven by lower direct costs as a result of the migration of subscribers to our own mobile network |
• | Switzerland: Rebased OCF decline of 7.4% in Q1, largely due to the aforementioned loss of residential cable subscription revenue |
• | Continuing CEE (Poland and Slovakia): Rebased OCF growth of 2.0% largely driven by the aforementioned revenue trend |
• | Net earnings (loss) attributable to Liberty Global shareholders was $7.0 million and ($1,186.5 million) for the three months ended March 31, 2019 and 2018, respectively. |
• | Total principal amount of debt and finance leases: $30.2 billion for continuing operations |
• | Leverage ratios8: At March 31, 2019, our adjusted gross and net leverage ratios for the Full Company were 5.4x and 5.3x, respectively. |
• | Average debt tenor10: Approximately 7 years, with ~71% not due until 2025 or thereafter for continuing operations |
• | Borrowing costs: Blended fully-swapped borrowing cost of our debt was 4.3% for continuing operations |
• | Liquidity7: $3.4 billion for our continuing operations, including (i) $0.9 billion of cash at March 31, 2019 and (ii) aggregate unused borrowing capacity11 under our credit facilities of $2.5 billion |
Three months ended March 31, 2018 | ||||||||
Revenue | OCF | |||||||
in millions | ||||||||
Continuing operations: | ||||||||
Acquisitions | $ | 16.3 | $ | 1.6 | ||||
Dispositions(i) | 12.6 | 9.8 | ||||||
Foreign Currency | (208.5 | ) | (83.9 | ) | ||||
Total decrease | $ | (179.6 | ) | $ | (72.5 | ) | ||
Discontinued Operations: | ||||||||
Dispositions | (101.3 | ) | (54.3 | ) | ||||
Foreign Currency | (86.3 | ) | (51.9 | ) | ||||
Total decrease | $ | (187.6 | ) | $ | (106.2 | ) |
(i) | Includes rebase adjustments related to agreements to provide transitional and other services to the VodafoneZiggo JV, Liberty Latin America and UPC Austria. These adjustments result in an equal amount of fees in both the 2019 and 2018 periods for those services that are deemed to be temporary in nature. The net amount of these adjustments resulted in increases in revenue and OCF of $12.6 million and $11.2 million, respectively, for the three months ended March 31, 2018. |
Finance | Debt & Finance | Cash | ||||||||||||||
Lease | Lease | and Cash | ||||||||||||||
Debt(ii), (iii) | Obligations | Obligations | Equivalents | |||||||||||||
in millions | ||||||||||||||||
Liberty Global and unrestricted subsidiaries | $ | 1,605.8 | $ | 45.2 | $ | 1,651.0 | $ | 824.5 | ||||||||
Virgin Media(iv) | 16,000.2 | 68.5 | 16,068.7 | 35.7 | ||||||||||||
UPC Holding | 5,970.6 | 53.9 | 6,024.5 | 26.3 | ||||||||||||
Telenet | 5,957.6 | 463.9 | 6,421.5 | 52.9 | ||||||||||||
Total | $ | 29,534.2 | $ | 631.5 | $ | 30,165.7 | $ | 939.4 |
(i) | Except as otherwise indicated, the amounts reported in the table include the named entity and its subsidiaries. |
(ii) | Debt amounts for UPC Holding and Telenet include notes issued by special purpose entities that are consolidated by the respective subsidiary. |
(iii) | Debt amounts for UPC Holding include those amounts that are not a direct obligation of the entities to be disposed within the UPC Holding borrowing group. Certain of these obligations have been repaid with portions of the proceeds from the disposition of UPC Austria. |
(iv) | The Virgin Media borrowing group includes certain subsidiaries of Virgin Media, but excludes the parent entity, Virgin Media Inc. The cash and cash equivalents amount includes cash and cash equivalents held by the Virgin Media borrowing group, but excludes cash and cash equivalents held by Virgin Media Inc. This amount is included in the amount shown for Liberty Global and unrestricted subsidiaries. |
Three months ended March 31, | ||||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Continuing operations | Discontinued Operations | |||||||||||||||
in millions, except % amounts | ||||||||||||||||
Customer premises equipment | $ | 228.6 | $ | 295.7 | $ | 124.0 | $ | 80.7 | ||||||||
New Build & Upgrade | 142.4 | 188.0 | 29.3 | 74.9 | ||||||||||||
Capacity | 72.6 | 126.5 | 25.7 | 26.3 | ||||||||||||
Product & Enablers | 126.6 | 207.8 | 14.8 | 28.6 | ||||||||||||
Baseline | 128.4 | 165.6 | 33.6 | 57.3 | ||||||||||||
Total P&E Additions | 698.6 | 983.6 | $ | 227.4 | $ | 267.8 | ||||||||||
Reconciliation of P&E Additions to capital expenditures: | ||||||||||||||||
Assets acquired under capital-related vendor financing arrangements(i) | (508.9 | ) | (635.9 | ) | ||||||||||||
Assets acquired under finance leases | (12.2 | ) | (23.9 | ) | ||||||||||||
Changes in current liabilities related to capital expenditures | 153.8 | 160.4 | ||||||||||||||
Total capital expenditures, net(ii) | $ | 331.3 | $ | 484.2 | ||||||||||||
Capital expenditures, net: | ||||||||||||||||
Third-party payments | $ | 371.6 | $ | 509.6 | ||||||||||||
Proceeds received for transfers to related parties(iii) | (40.3 | ) | (25.4 | ) | ||||||||||||
Total capital expenditures, net | $ | 331.3 | $ | 484.2 | ||||||||||||
P&E Additions as % of revenue | 24.4 | % | 32.1 | % |
(i) | Amounts exclude related VAT of $84.8 million and $96.6 million during the three months ended March 31, 2019 and 2018, respectively, that were also financed by our vendors 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. |
(iii) | Primarily relates to transfers of centrally-procured property and equipment to our Discontinued Operations and the VodafoneZiggo JV. |
Three months ended March 31, | % | Rebased | ||||||||||||
2019 | 2018 | Change | % Change | |||||||||||
Liberty Global | $ | 60.20 | $ | 63.97 | (5.9 | %) | 0.9 | % | ||||||
U.K. & Ireland (Virgin Media) | £ | 51.36 | £ | 51.58 | (0.4 | %) | (0.3 | %) | ||||||
Belgium (Telenet) | € | 57.27 | € | 54.90 | 4.3 | % | 4.4 | % | ||||||
UPC | € | 37.01 | € | 36.81 | 0.5 | % | (0.5 | %) |
ARPU per Mobile Subscriber | ||||||||||||||
Three months ended March 31, | % | Rebased | ||||||||||||
2019 | 2018 | Change | % Change | |||||||||||
Liberty Global: | ||||||||||||||
Including interconnect revenue | $ | 16.27 | $ | 15.51 | 4.9 | % | (1.2 | %) | ||||||
Excluding interconnect revenue | $ | 13.97 | $ | 12.83 | 8.9 | % | (1.6 | %) |
Consolidated Operating Data — March 31, 2019 | ||||||||||||||||||||||||
Video | ||||||||||||||||||||||||
Homes Passed | Two-way Homes Passed | Cable Customer Relationships | Basic Video Subscribers(i) | Enhanced Video Subscribers | DTH Subscribers | Total Video | Internet Subscribers(ii) | Telephony Subscribers(iii) | Total RGUs | Total Mobile Subscribers(iv) | ||||||||||||||
Continuing operations: | ||||||||||||||||||||||||
U.K. | 14,510,700 | 14,504,000 | 5,534,200 | — | 3,846,700 | — | 3,846,700 | 5,259,600 | 4,617,300 | 13,723,600 | 3,030,600 | |||||||||||||
Belgium | 3,357,100 | 3,357,100 | 2,099,800 | 191,400 | 1,725,400 | — | 1,916,800 | 1,658,100 | 1,243,200 | 4,818,100 | 2,704,800 | |||||||||||||
Switzerland(v) | 2,344,400 | 2,344,400 | 1,092,200 | 427,600 | 632,600 | — | 1,060,200 | 686,200 | 513,600 | 2,260,000 | 159,100 | |||||||||||||
Ireland | 929,800 | 897,600 | 437,700 | 2,900 | 269,200 | — | 272,100 | 378,100 | 352,300 | 1,002,500 | 86,100 | |||||||||||||
Poland | 3,479,400 | 3,425,000 | 1,462,800 | 177,900 | 1,053,800 | — | 1,231,700 | 1,192,300 | 668,000 | 3,092,000 | 2,800 | |||||||||||||
Slovakia | 615,100 | 600,300 | 194,700 | 27,300 | 144,000 | — | 171,300 | 138,500 | 86,100 | 395,900 | — | |||||||||||||
Total continuing operations | 25,236,500 | 25,128,400 | 10,821,400 | 827,100 | 7,671,700 | — | 8,498,800 | 9,312,800 | 7,480,500 | 25,292,100 | 5,983,400 | |||||||||||||
Discontinued Operations: | ||||||||||||||||||||||||
Germany | 13,152,000 | 13,075,700 | 7,179,100 | 4,692,900 | 1,574,700 | — | 6,267,600 | 3,638,300 | 3,396,700 | 13,302,600 | 273,300 | |||||||||||||
Romania | 3,162,700 | 3,126,800 | 961,700 | 205,900 | 708,400 | — | 914,300 | 594,200 | 581,100 | 2,089,600 | — | |||||||||||||
Hungary | 1,833,600 | 1,816,100 | 865,500 | 62,900 | 628,300 | — | 691,200 | 700,400 | 686,400 | 2,078,000 | 115,800 | |||||||||||||
Czech Republic | 1,550,900 | 1,531,100 | 613,600 | 172,500 | 366,500 | — | 539,000 | 506,100 | 202,700 | 1,247,800 | — | |||||||||||||
DTH | — | — | 756,800 | — | — | 756,800 | 756,800 | 11,400 | 11,400 | 779,600 | — | |||||||||||||
Total Discontinued Operations | 19,699,200 | 19,549,700 | 10,376,700 | 5,134,200 | 3,277,900 | 756,800 | 9,168,900 | 5,450,400 | 4,878,300 | 19,497,600 | 389,100 |
Subscriber Variance Table - March 31, 2019 vs. December 31, 2018 | |||||||||||||||||||||||||
Video | |||||||||||||||||||||||||
Homes Passed | Two-way Homes Passed | Cable Customer Relationships | Basic Video Subscribers(i) | Enhanced Video Subscribers | DTH Subscribers | Total Video | Internet Subscribers(ii) | Telephony Subscribers(iii) | Total RGUs | Total Mobile Subscribers(iv) | |||||||||||||||
Continuing operations: | |||||||||||||||||||||||||
U.K. | 93,400 | 93,700 | 24,800 | — | (25,300 | ) | — | (25,300 | ) | 35,000 | 46,100 | 55,800 | (8,900 | ) | |||||||||||
Belgium | 6,400 | 6,400 | (15,200 | ) | (9,800 | ) | (13,300 | ) | — | (23,100 | ) | 300 | (12,900 | ) | (35,700 | ) | 20,900 | ||||||||
Switzerland(v) | 6,200 | 6,200 | (23,600 | ) | (9,600 | ) | (13,200 | ) | — | (22,800 | ) | (14,100 | ) | (6,000 | ) | (42,900 | ) | 12,800 | |||||||
Ireland | 6,800 | 7,100 | 500 | (1,600 | ) | 2,600 | — | 1,000 | 2,400 | — | 3,400 | 4,600 | |||||||||||||
Poland | 15,600 | 16,100 | 15,000 | (2,600 | ) | 11,100 | — | 8,500 | 17,100 | 13,700 | 39,300 | (400 | ) | ||||||||||||
Slovakia | 1,200 | 1,200 | 600 | (400 | ) | 1,700 | — | 1,300 | 1,700 | 1,700 | 4,700 | — | |||||||||||||
Total continuing operations | 129,600 | 130,700 | 2,100 | (24,000 | ) | (36,400 | ) | — | (60,400 | ) | 42,400 | 42,600 | 24,600 | 29,000 | |||||||||||
Discontinued Operations: | |||||||||||||||||||||||||
Germany | 15,800 | 15,500 | 3,200 | 17,400 | (32,800 | ) | — | (15,400 | ) | 22,800 | 15,900 | 23,300 | (10,000 | ) | |||||||||||
Romania | 8,900 | 8,800 | (4,200 | ) | (16,100 | ) | 9,800 | — | (6,300 | ) | 1,800 | 7,800 | 3,300 | — | |||||||||||
Hungary | 5,600 | 5,500 | 2,600 | (5,400 | ) | 4,700 | — | (700 | ) | 6,000 | 9,300 | 14,600 | 5,900 | ||||||||||||
Czech Republic | 1,800 | 1,800 | (2,800 | ) | 2,200 | (2,700 | ) | — | (500 | ) | — | 8,700 | 8,200 | — | |||||||||||
DTH | — | — | (24,000 | ) | — | — | (24,000 | ) | (24,000 | ) | 200 | 200 | (23,600 | ) | — | ||||||||||
Total Discontinued Operations | 32,100 | 31,600 | (25,200 | ) | (1,900 | ) | (21,000 | ) | (24,000 | ) | (46,900 | ) | 30,800 | 41,900 | 25,800 | (4,100 | ) |
Subscriber Variance Table - March 31, 2019 vs. December 31, 2018 | |||||||||||||||||||||||
Video | |||||||||||||||||||||||
Homes Passed | Two-way Homes Passed | Cable Customer Relationships | Basic Video Subscribers(i) | Enhanced Video Subscribers | Total Video | Internet Subscribers(ii) | Telephony Subscribers(iii) | Total RGUs | Total Mobile Subscribers(iv) | ||||||||||||||
Organic Change Summary: | |||||||||||||||||||||||
U.K. | 93,400 | 93,700 | 25,000 | — | (25,300 | ) | (25,300 | ) | 35,000 | 46,100 | 55,800 | (11,300 | ) | ||||||||||
Belgium | 6,400 | 6,400 | (15,200 | ) | (9,800 | ) | (13,300 | ) | (23,100 | ) | 300 | (12,900 | ) | (35,700 | ) | 20,900 | |||||||
Other Europe | 29,800 | 30,600 | (11,500 | ) | (14,100 | ) | 2,000 | (12,100 | ) | 7,100 | 9,600 | 4,600 | 17,200 | ||||||||||
Total Organic Change | 129,600 | 130,700 | (1,700 | ) | (23,900 | ) | (36,600 | ) | (60,500 | ) | 42,400 | 42,800 | 24,700 | 26,800 | |||||||||
Q1 2019 Adjustments: | |||||||||||||||||||||||
Q1 2019 Adjustment - U.K. | — | — | (200 | ) | — | — | — | — | — | — | 2,400 | ||||||||||||
Q1 2019 Adjustment - Poland | — | — | 4,000 | (100 | ) | 200 | 100 | — | (200 | ) | (100 | ) | (200 | ) | |||||||||
Net Adds (Reductions) | — | — | 3,800 | (100 | ) | 200 | 100 | — | (200 | ) | (100 | ) | 2,200 |
(i) | We have approximately 197,400 “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. |
(ii) | 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 74,400 subscribers who have requested and received this service. |
(iii) | 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 157,500 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, 2019, our mobile subscriber count included 476,700 and 343,800 prepaid mobile subscribers in Belgium and the U.K., respectively. |
(v) | Pursuant to service agreements, Switzerland offers enhanced video, broadband internet and telephony services over networks owned by third-party cable operators (“partner networks”). A partner network RGU is only recognized if there is a direct billing relationship with the customer. At March 31, 2019, Switzerland’s partner networks account for 124,100 Cable Customer Relationships, 296,400 RGUs, which include 105,600 Enhanced Video Subscribers, 108,200 Internet Subscribers, and 82,600 Telephony Subscribers. Subscribers to our enhanced video services provided over partner networks receive basic video services from the partner networks as opposed to our operations. Due to the fact that we do not own these partner networks, we do not report homes passed for Switzerland’s partner networks. |
1 | With the exception of OFCF, 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. OFCF growth rates are presented on a reported basis. |
2 | The term "excluding Switzerland" represents our continuing operations excluding UPC Switzerland and certain holding companies within the UPC Holding borrowing group (together, the "Switzerland Disposal Group"), including the UPC Holding borrowing group’s existing senior and senior secured notes (the "UPC Notes"), associated derivatives and certain other debt items. This is the basis on which analyst consensus estimates for our key performance indicators are currently derived and on which we originally provided our 2019 guidance for OCF, Adjusted FCF and Property and Equipment Additions. For the 2019 period, our Discontinued Operations include Germany, Hungary, Romania, the Czech Republic and our DTH business. For the 2018 period, our Discontinued Operations also include our former operations in Austria through July 31, 2018. |
3 | Pro forma Adjusted FCF incorporates our preliminary estimate of (a) assumed interest and related derivative payments that were made by the UPC Holding continuing operations during the period and (b) the net cash flows that we would have received from transitional services agreements if the sale of the remaining Discontinued Operations and UPC Switzerland had occurred on January 1, 2019. A reconciliation of our Adjusted FCF guidance for 2019 to a U.S. GAAP measure is not provided as not all elements of the reconciliation are projected as part of our forecasting process, as certain items may vary significantly from one period to another. |
4 | Absolute full-year 2019 U.S. dollar guidance figures based on FX rates of EUR/USD 1.13 and GBP/USD 1.30 |
5 | Includes subscription and non-subscription revenue. For additional information regarding how we define our revenue categories, see note 17 to the condensed consolidated financial statements included in our 10-Q. |
6 | Total B2B includes subscription (SOHO) and non-subscription revenue. B2B and SOHO growth rates include upsell from our residential businesses. |
7 | Liquidity refers to cash and cash equivalents plus the maximum undrawn commitments under subsidiary borrowing facilities, without regard to covenant compliance calculations. |
8 | Consistent with how we calculate our leverage ratios under our debt agreements, we calculate our debt ratios on a Full Company basis, which includes our continuing operations and our remaining Discontinued Operations, with the gross and net debt ratios defined as total debt and net debt, respectively, divided by annualized OCF of the latest quarter. Net debt is defined as total debt less cash and cash equivalents. For purposes of these calculations, debt is measured using swapped foreign currency rates, consistent with the covenant calculation requirements of our subsidiary debt agreements, and excludes the loans backed or secured by the shares we hold in ITV plc and Lions Gate Entertainment Corp. We have not presented leverage ratios on a continuing operations basis as we believe that such a presentation would overstate our leverage and would not be representative of the actual leverage ratios that we will report once all dispositions are completed. For additional information, see note 4 to the condensed consolidated financial statements included in our 10-Q. The following table details the calculation of our Full Company consolidated debt and net debt to annualized consolidated OCF ratios as of and for the quarter ended March 31, 2019: |
As of and for the quarter ended March 31, 2019 | |||
in millions, except ratios | |||
Consolidated Debt to Annualized Consolidated OCF: | |||
Debt and finance lease obligations before deferred financing costs, discounts and premiums | $ | 40,023.6 | |
Principal related projected derivative cash payments | (1,508.1 | ) | |
ITV Collar Loan | (1,406.4 | ) | |
Lionsgate Collar Loan | (82.9 | ) | |
Adjusted debt and finance lease obligations before deferred financing costs, discounts and premiums | $ | 37,026.2 | |
Annualized quarterly OCF | $ | 6,800.8 | |
Consolidated debt to annualized consolidated OCF ratio | 5.4 | ||
Consolidated Net Debt to Annualized Consolidated OCF: | |||
Adjusted debt and finance lease obligations before deferred financing costs, discounts and premiums | $ | 37,026.2 | |
Cash and cash equivalents | (951.1 | ) | |
Adjusted net debt and finance lease obligations before deferred financing costs, discounts and premiums | $ | 36,075.1 | |
Annualized quarterly OCF | $ | 6,800.8 | |
Consolidated net debt to annualized consolidated OCF ratio | 5.3 |
9 | Our Q1 2018 mobile subscriber additions have been restated to correct the overstatement of our and Telenet's subscriber base in relation to (i) the removal of inactive "pay as you go subscribers" within Telenet's postpaid subscriber base as these subscribers do not pay a monthly subscription fee and are only billed on their effective usage and (ii) the removal of small or medium enterprise mobile telephony subscribers that are now considered business customers and are no longer included in our mobile telephony subscriber count. These adjustments resulted in reductions to our mobile subscriber base of 49,400 and 127,300, respectively, at March 31, 2018 and 53,000 and 133,200, respectively, at December 31, 2017. |
10 | For purposes of calculating our average tenor, total third-party debt excludes vendor financing. |
11 | Our aggregate unused borrowing capacity of $2.5 billion represents the maximum undrawn commitments under the applicable facilities of our continuing operations without regard to covenant compliance calculations. Upon completion of the relevant March 31, 2019 compliance reporting requirements for our credit facilities, and assuming no further changes from quarter-end borrowing levels, we anticipate that the borrowing capacity of our continuing operations will continue to be $2.5 billion. |
Three months ended March 31, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Continuing operations | Discontinued Operations (i) | ||||||||||||||
in millions | |||||||||||||||
Net cash provided by operating activities | $ | 306.3 | $ | 670.3 | $ | 459.1 | $ | 609.0 | |||||||
Cash payments for direct acquisition and disposition costs | 12.4 | 1.6 | — | — | |||||||||||
Expenses financed by an intermediary(ii) | 564.0 | 507.3 | 138.8 | 50.5 | |||||||||||
Capital expenditures, net | (331.3 | ) | (484.2 | ) | (110.6 | ) | (161.8 | ) | |||||||
Principal payments on amounts financed by vendors and intermediaries | (1,162.8 | ) | (1,675.9 | ) | (209.6 | ) | (120.9 | ) | |||||||
Principal payments on certain finance leases | (13.1 | ) | (18.0 | ) | (2.7 | ) | (3.0 | ) | |||||||
Adjusted FCF | (624.5 | ) | $ | (998.9 | ) | $ | 275.0 | $ | 373.8 | ||||||
Pro forma adjustments related to the sale of the remaining Discontinued Operations and the Switzerland Disposal Group: | |||||||||||||||
Sale of the Switzerland Disposal Group(iii) | (40.9 | ) | |||||||||||||
Interest and derivative payments(iv) | (21.5 | ) | |||||||||||||
Transitional services agreements(v) | 64.8 | ||||||||||||||
Pro forma Adjusted FCF(vi) | $ | (622.1 | ) |
(i) | For the 2019 period, our Discontinued Operations include Germany, Hungary, Romania and the Czech Republic and our DTH business. For the 2018 period, our Discontinued Operations also include our former operation in Austria through July 31, 2018. |
(ii) | For purposes of our condensed consolidated statements of cash flows, expenses financed by an intermediary are treated as hypothetical operating cash outflows and hypothetical financing cash inflows when the expenses are incurred. When we pay the financing intermediary, we record financing cash outflows in our condensed consolidated statements of cash flows. For purposes of our Adjusted Free Cash Flow definition, we add back the hypothetical operating cash outflow when these financed expenses are incurred and deduct the financing cash outflows when we pay the financing intermediary. |
(iii) | The Switzerland Disposal Group is included within our Continuing Operations Adjusted FCF. In connection with the pending disposition, Sunrise will acquire the Switzerland Disposal Group, the UPC Notes, associated derivatives and certain other debt items. As a result, this pro forma adjustment represents the Adjusted FCF of the Switzerland Disposal Group, including 100% of the interest and related derivative payments made during the applicable period related to the UPC Notes. |
(iv) | Represents the estimated interest and related derivative payments that have been made by UPC Holding in relation to the continuing UPC operations in Poland and Slovakia during the applicable period. These estimated payments are calculated based on Poland and Slovakia’s pro rata share of UPC Holding's OCF and UPC Holding's aggregate interest and derivative payments during the applicable period. Although we believe that these estimated payments represent a reasonable estimate of the annual interest and related derivative payments that will occur in relation to the continuing operations in Poland and Slovakia, no assurance can be given that the actual interest and derivative payments will be equivalent to the amounts presented. No pro forma adjustments are required with respect to Unitymedia's interest and derivative payments as substantially all of Unitymedia’s debt and related derivative instruments are direct obligations of entities within the Vodafone Disposal Group. As a result, the interest and related derivative payments associated with such debt and derivative instruments of Unitymedia are included in discontinued operations. |
(v) | Represents our preliminary estimate of the net cash flows that we would have received from transitional services agreements if the sale of the remaining Discontinued Operations and the Switzerland Disposal Group had occurred on January 1, 2019. The estimated net cash flows are based on the estimated revenue that we expect to recognize from our transitional services agreements during the first 12 months following the completion of the sale of the remaining Discontinued Operations and Switzerland Disposal Group, less the estimated incremental costs that we expect to incur to provide such transitional services. As a result, this pro forma adjustment includes $39.7 million related to our discontinued operations in Germany, Hungary, Romania and the Czech Republic, $24.4 million related to the Switzerland Disposal Group and $0.7 million related to our discontinued DTH business. |
(vi) | Represents the Adjusted FCF that we estimate would have resulted if the sale of the remaining Discontinued Operations and the Switzerland Disposal Group had been completed on January 1, 2019. Actual amounts may differ from the amounts assumed for purposes of this pro forma calculation. For example, our Pro forma Adjusted FCF does not include any future benefits related to reductions in our corporate costs as a result of our operating model rationalization or any other potential future operating or capital cost reductions attributable to our continuing or discontinued operations. |
Three months ended March 31, | ||||||||||||||||
2019 | 2018 | |||||||||||||||
Continuing operations | Discontinued Operations | Continuing operations | Discontinued Operations | |||||||||||||
in millions | ||||||||||||||||
Operating income | $ | 105.5 | $ | 504.1 | $ | 117.6 | $ | 375.5 | ||||||||
Share-based compensation expense | 67.3 | 3.5 | 42.7 | 3.1 | ||||||||||||
Depreciation and amortization | 939.6 | — | 1,040.7 | 255.7 | ||||||||||||
Impairment, restructuring and other operating items, net | 70.9 | 9.3 | 60.7 | 2.9 | ||||||||||||
Total OCF | $ | 1,183.3 | $ | 516.9 | $ | 1,261.7 | $ | 637.2 |
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