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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Liberty Global Ltd | NASDAQ:LBTYB | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.57 | 3.56% | 16.60 | 16.00 | 21.93 | 16.81 | 16.29 | 16.29 | 8,695 | 00:36:40 |
All Full-Year OCF and Adj. FCF Targets Confirmed for LBTY & LiLAC
European Operating Income Down 5% in Q2, LiLAC to $159 Million
Q2 Rebased OCF Growth of 6% in Europe and 10.5% at LiLAC
Q2 LBTY Share Repurchases of $1.2 Billion and $2.2 Billion YTD
LiLAC Group Spin-Off Remains On Track for Year-End 2017
Liberty Global plc ("Liberty Global") (NASDAQ: LBTYA, LBTYB, LBTYK, LILA and LILAK), today announces financial and operating results for the three months ("Q2") and six months ("YTD" or "H1") ended June 30, 2017 for the Liberty Global Group1 and the LiLAC Group1.
CEO Mike Fries stated, "During the first six months of the year, we added 406,000 RGUs2 across our European markets, including a 16%3 year-over-year improvement in Western Europe, underpinned by our strongest H1 video performance since 2006 and continued network expansion. Our next-generation4 video platforms, which include elegant user-interfaces, in-and-out of the home viewing capabilities and robust content line-ups, continue resonating with consumers, as we've added 1 million subscribers across Europe during the last twelve months. In the U.K., we have been proactively rolling out our new 4k-enabled, Virgin TV V6 set-top box, where we are seeing strong demand from both new and existing customers. In our other markets, we continue expanding the reach of Horizon TV and over 40% of our video base in Europe now subscribes to one of our next-generation TV platforms. On the connectivity front, nearly one-third of our 15 million broadband subscribers enjoy our high-speed Connect Box, which provides an impeccable WiFi user experience throughout the home, and our subscribers can now seamlessly access 10 million WiFi spots across Europe."
"From a financial perspective, our Q2 rebased5 OCF6 result in Europe showed both sequential and year-over-year improvement, as we delivered 6% rebased OCF growth. This result was fueled by strong performances in Germany, Belgium and CEE, which delivered Q2 rebased OCF growth of 6%, 5% and 7%, respectively, and was further supported by our company-wide indirect cost efficiencies. On top-line growth, we reported a 2% rebased improvement as our B2B7 business delivered 14% rebased revenue growth in the quarter, partly offset by continued challenges in our mobile business which contracted 6%. As expected, cable ARPU8 and revenue growth at Virgin Media remained soft, as the discounting and mix effects that impacted growth in Q1 continued in the second quarter. At the same time, we are seeing some early signs of progress and expect the ARPU headwind in the U.K. to lessen in Q4 of this year. We continue to anticipate approximately 5% rebased OCF growth for Liberty Global Group in 2017."
"With respect to Project Lightning, we've made significant strides in solidifying the foundation of the program through the appointment of a dedicated new leadership team9, as well as an overhaul of key processes and procedures. During Q2, we built 127,000 new premises at Virgin Media, including a record monthly build performance in June, and our cumulative total now stands at nearly 800,000 premises since the project's inception. Meanwhile, on the European continent, the number of new build and upgraded homes in markets like Germany and CEE continue to broadly track our expectations. In these regions, we have added a cumulative total of 1.4 million newly marketable premises over the last 2 years."
"At LiLAC, we delivered 10.5% rebased OCF growth in Q2 due to double-digit improvements at both VTR and CWC10. In the case of CWC, we've taken actions that should help drive organic revenue growth and cost efficiencies in the future. With regard to our planned spin-off of the LiLAC Group, we are pleased to report that we submitted a draft registration statement with the SEC on a confidential basis in July, and we still expect to complete the transaction around the end of the year. We believe the spin-off will benefit LiLAC shareholders by creating a stand-alone, asset-backed equity, while enhancing its potential attractiveness as an acquisition currency for consolidation opportunities in the highly-fragmented Latin American and Caribbean telecommunications markets. In terms of guidance, we continue to anticipate approximately $1.5 billion11 of OCF for full-year 2017 at LiLAC."
"We remained active in the credit markets during the first half of the year, refinancing over $11 billion of long-term debt in Europe and Latin America combined. At the end of June, our fully-swapped borrowing cost12 for Liberty Global plc was 4.8%, our average tenor13 exceeded seven years and we had substantial liquidity14 of over $6 billion. With respect to our share buyback programs, we took advantage of recent trading levels and repurchased a record $2.2 billion of LBTY equity, as well as $41 million of LiLAC Group stock during the first half of 2017. Going forward, we will continue to manage our business through the lens of our long-standing levered-equity strategy, and will continue to be opportunistic when our stock prices look especially attractive."
European Highlights Q2 2017
YOYGrowth/(Decline)*
YTD 2017YOYGrowth/(Decline)*
Subscribers
Organic RGU Net Additions 161,900 (37.5 %) 406,200 (6.3 %)Financial (in USD millions, unless noted)
Revenue $ 3,664 1.6 % $ 7,183 1.9 % OCF $ 1,733 6.0 % $ 3,338 5.0 % Operating income $ 483 (5.0 %) $ 914 (11.7 %) Adjusted FCF(17) $ 325 N.M. $ (8 ) N.M. Cash provided by operating activities $ 1,509 $ 2,412 Cash provided (used) by investing activities $ (926 ) $ 965 Cash used by financing activities $ (1,662 ) $ (3,445 )* For the RGU growth rate, the Netherlands is excluded from the 2016 figures; Revenue and OCF YoY growth rates are on a rebased basis.N.M. - Not Meaningful
LiLAC Highlights Q2 2017
YOYGrowth/(Decline)*
YTD 2017YOYGrowth/(Decline)*
Subscribers
Organic RGU Net Additions 15,700 (65.6 %) 57,600 (14.0 %)Financial (in USD millions, unless noted)
Revenue $ 921 2.4 % $ 1,832 0.8 % OCF $ 368 10.5 % $ 722 (0.4 %) Operating income $ 159 N.M. $ 297 N.M. Adjusted FCF $ 114 N.M. $ 56 N.M. Cash provided by operating activities $ 224 $ 299 Cash used by investing activities $ (123 ) $ (253 ) Cash provided (used) by financing activities $ (27 ) $ 2* Revenue and OCF YoY growth rates are on a rebased basis.N.M. - Not Meaningful
Subscriber Growth - Liberty Global Group (Europe)
Three months ended Six months ended June 30, June 30, 2017 2016 2017 2016 Organic RGU net additions (losses) by product (excluding NL)(3) (excluding NL)(3) Video (16,100 ) (39,500 ) (31,200 ) (137,200 ) Data 100,100 150,800 254,500 296,000 Voice 77,900 147,700 182,900 274,700 Total Liberty Global Group 161,900 259,000 406,200 433,500 Organic RGU net additions (losses) by market U.K./Ireland 78,100 50,100 236,100 143,000 Germany 53,800 109,300 106,200 132,900 Belgium (15,300 ) 17,600 (27,300 ) 23,900 Switzerland/Austria 10,600 (9,700 ) 8,200 (21,700 ) Central and Eastern Europe 34,700 91,700 83,000 155,400 Total Liberty Global Group 161,900 259,000 406,200 433,500 Organic Mobile SIM additions (losses) by product Postpaid 98,700 94,700 189,900 183,300 Prepaid (92,900 ) (52,500 ) (165,900 ) (119,000 ) Total Liberty Global Group 5,800 42,200 24,000 64,300 Organic Mobile SIM additions (losses) by market U.K./Ireland (7,500 ) 25,300 (4,100 ) 9,200 Belgium (6,300 ) (8,700 ) 400 9,100 Other 19,600 25,600 27,700 46,000 Total Liberty Global Group 5,800 42,200 24,000 64,300Revenue Highlights - Liberty Global Group (Europe)
The following table presents (i) revenue of each of our consolidated reportable segments for the comparative periods, and (ii) the percentage change from period to period on a reported and a rebased basis:
Three months ended Increase/(decrease) Six months ended Increase/(decrease) June 30, June 30, Revenue 2017 2016 % Rebased % 2017 2016 % Rebased % in millions, except % amounts European Division: U.K./Ireland $ 1,566.1 $ 1,717.7 (8.8 ) 0.9 $ 3,070.5 $ 3,404.2 (9.8 ) 1.3 Belgium 686.0 707.3 (3.0 ) 0.7 1,347.4 1,317.5 2.3 0.9 Germany 655.8 643.5 1.9 4.6 1,284.9 1,260.6 1.9 5.1 Switzerland/Austria 435.1 447.0 (2.7 ) (1.5 ) 858.8 880.4 (2.5 ) (1.4 ) The Netherlands — 678.8 N.M. N.M. — 1,348.6 N.M. N.M. Total Western Europe 3,343.0 4,194.3 (20.3 ) 1.2 6,561.6 8,211.3 (20.1 ) 1.6 Central and Eastern Europe 288.6 274.0 5.3 6.4 559.9 540.1 3.7 5.8 Central and other 31.6 (0.9 ) N.M. N.M. 60.3 (3.3 ) N.M. N.M. Total European Division 3,663.2 4,467.4 (18.0 ) 1.6 7,181.8 8,748.1 (17.9 ) 1.9 Corporate and other 0.5 15.2 (96.7 ) N.M. 0.9 29.8 (97.0 ) N.M. Intersegment eliminations — (11.4 ) N.M. N.M. — (22.6 ) N.M. N.M. Total Liberty Global Group $ 3,663.7 $ 4,471.2 (18.1 ) 1.6 $ 7,182.7 $ 8,755.3 (18.0 ) 1.9N.M. - Not Meaningful
Q2 2017 Rebased Revenue Growth - Segment Highlights
Operating Income - Liberty Global Group (Europe)
Operating Cash Flow Highlights - Liberty Global Group (Europe)
The following table presents (i) OCF of each of our consolidated reportable segments for the comparative periods, and (ii) the percentage change from period to period on a reported and a rebased basis:
Three months ended Increase/(decrease) Six months ended Increase/(decrease) June 30, June 30, OCF 2017 2016 % Rebased % 2017 2016 % Rebased % in millions, except % amounts European Division: U.K./Ireland $ 709.8 $ 765.5 (7.3 ) 3.9 $ 1,358.3 $ 1,510.1 (10.1 ) 2.4 Belgium 317.8 311.3 2.1 5.4 615.7 581.1 6.0 6.8 Germany 412.8 400.3 3.1 5.8 795.6 779.7 2.0 5.2 Switzerland/Austria 266.9 263.6 1.3 2.3 522.0 521.7 0.1 1.0 The Netherlands — 364.1 N.M. N.M. — 732.0 N.M. N.M. Total Western Europe 1,707.3 2,104.8 (18.9 ) 4.4 3,291.6 4,124.6 (20.2 ) 3.7 Central and Eastern Europe 122.9 114.6 7.2 7.2 233.9 225.5 3.7 5.5 Central and other (51.2 ) (82.1 ) 37.6 4.8 (93.2 ) (166.4 ) 44.0 14.3 Total European Division 1,779.0 2,137.3 (16.8 ) 4.9 3,432.3 4,183.7 (18.0 ) 4.4 Corporate and other (45.7 ) (62.7 ) 27.1 25.0 (94.3 ) (115.5 ) 18.4 14.6 Total Liberty Global Group $ 1,733.3 $ 2,074.6 (16.5 ) 6.0 $ 3,338.0 $ 4,068.2 (17.9 ) 5.0 OCF Margin 47.3 % 46.4 % 46.5 % 46.5 %N.M. - Not Meaningful
Q2 2017 Rebased Operating Cash Flow Growth - Segment Highlights
Net Loss - Liberty Global Group (Europe)
Property and Equipment Additions - Liberty Global Group (Europe)
The details of our property and equipment additions21 are as follows:
Three months ended Six months ended June 30, June 30, 2017 2016 2017 2016 in millions, except % amounts Customer premises equipment $ 304.2 $ 229.9 $ 600.2 $ 466.1 New Build & Upgrade 305.5 203.6 495.3 354.6 Capacity 163.0 159.8 279.6 266.1 Baseline 200.9 219.2 357.2 393.7 Product & Enablers 230.2 142.9 355.9 260.3 Property and equipment additions (excluding the Netherlands(3)) 1,203.8 955.4 2,088.2 1,740.8 The Netherlands — 143.1 — 283.2 Total property and equipment additions $ 1,203.8 $ 1,098.5 2,088.2 2,024.0 Property and equipment additions as % of revenue (excluding NL(3)) 32.9 % 25.2 % 29.1 % 23.5 %Consolidated Statements of Cash Flows - Liberty Global Group (Europe)
Six months ended June 30, 2017 2016 Variance in millions Net cash provided (used) by: Operating Activities $ 2,411.5 $ 2,564.0 $ (152.5 ) Investing Activities $ 964.7 $ (2,402.9 ) $ 3,367.6 Financing Activities $ (3,444.8 ) $ (112.4 ) $ (3,332.4 )Adjusted Free Cash Flow - Liberty Global Group (Europe)
Three months ended Six months ended June 30, June 30, 2017 2016 2017 2016 in millions in millions Adjusted Free Cash Flow $ 325.1 $ 516.4 $ (7.5 ) $ 411.5Leverage and Liquidity - Liberty Global Group (Europe - at June 30, 2017)
VodafoneZiggo Joint Venture (not consolidated) - Liberty Global Group
Our noncontrolling 50% interest in the VodafoneZiggo JV is attributed to Liberty Global Group. VodafoneZiggo is a leading Dutch company that provides fixed, mobile and integrated communication and entertainment services to consumers and businesses. The unaudited financial and operating information set forth below is preliminary and subject to change. All financial and operating information presented in this section is presented in accordance with VodafoneZiggo's policies.
VodafoneZiggo highlights for Q2 2017(a):
The following table sets forth selected operating statistics of VodafoneZiggo:
June 30, 2017 2016Fixed-line Subscribers (RGUs)
Basic Video 592,500 720,200 Enhanced Video 3,341,100 3,291,500 Total Video 3,933,600 4,011,700 Internet 3,197,200 3,118,400 Telephony 2,544,800 2,530,500 Total RGUs 9,675,600 9,660,600 Fixed Customer Relationships 3,936,300 4,033,300Mobile Subscribers (pro forma for June 30, 2016)
Postpaid 4,085,800 4,059,800 Prepaid (c) 964,200 1,184,600 Total Mobile subscribers 5,050,000 5,244,400____________________________
(c) Under the VodafoneZiggo definition of prepaid subscribers, customers who do not pay a recurring monthly fee are excluded from VodafoneZiggo's prepaid mobile telephony subscriber counts after a period of inactivity of 15 months.Subscriber Growth - LiLAC Group
Three months ended Six months ended June 30, June 30, 2017 2016 2017 2016 Organic RGU net additions (losses) by product Video 6,300 9,700 11,500 13,200 Data 23,200 30,700 61,800 56,200 Voice (13,800 ) 5,300 (15,700 ) (2,400 ) Total LiLAC Group 15,700 45,700 57,600 67,000 Organic RGU net additions (losses) by market CWC (15,600 ) 6,500 (5,700 ) 6,500 Chile 33,800 36,800 59,200 53,000 Puerto Rico (2,500 ) 2,400 4,100 7,500 Total LiLAC Group 15,700 45,700 57,600 67,000 Organic Mobile SIM additions (losses) by product Postpaid 10,400 10,600 22,500 11,600 Prepaid (44,300 ) (4,800 ) (17,300 ) (5,800 ) Total LiLAC Group (33,900 ) 5,800 5,200 5,800 Organic Mobile SIM additions (losses) by market CWC (48,200 ) (1,200 ) (21,600 ) (1,200 ) Chile 14,300 7,000 26,800 7,000 Puerto Rico — — — — Total LiLAC Group (33,900 ) 5,800 5,200 5,800Revenue Highlights - LiLAC Group
On May 16, 2016, a subsidiary of Liberty Global acquired CWC. Accordingly, CWC has been included in our financial results under our U.S. GAAP accounting policies since the acquisition date. The following table presents (i) revenue of each of our consolidated reportable segments for the comparative periods and (ii) the percentage change from period to period on a reported and a rebased basis:
Three months ended Increase Six months ended Increase/(decrease) June 30, June 30, Revenue 2017 2016 % Rebased % 2017 2016 % Rebased % in millions, except % amounts LiLAC Division: CWC $ 582.7 $ 285.6 104.0 0.7 $ 1,158.3 $ 285.6 305.6 (1.8 ) Chile 231.1 210.6 9.7 7.6 460.4 410.6 12.1 7.4 Puerto Rico 108.3 106.9 1.3 1.3 215.0 210.8 2.0 2.0 Total LiLAC Division 922.1 603.1 52.9 2.4 1,833.7 907.0 102.2 0.8 Intersegment eliminations (1.2 ) (0.2 ) N.M. N.M. (1.9 ) (0.2 ) N.M. N.M. Total LiLAC Group $ 920.9 $ 602.9 52.7 2.4 $ 1,831.8 $ 906.8 102.0 0.8N.M. - Not Meaningful
Q2 2017 Rebased Revenue Growth - Segment Highlights
Operating Income - LiLAC Group
Operating Cash Flow Highlights - LiLAC Group
The following table presents (i) OCF of each of our consolidated reportable segments for the comparative periods and (ii) the percentage change from period to period on a reported and a rebased basis:
Three months ended Increase/(decrease) Six months ended Increase/(decrease) June 30, June 30, OCF 2017 2016 % Rebased % 2017 2016 % Rebased % in millions, except % amounts LiLAC Division: CWC $ 224.1 $ 101.0 121.9 11.4 $ 437.2 $ 101.0 332.9 (6.1 ) Chile 92.3 81.8 12.8 10.6 183.9 158.1 16.3 11.3 Puerto Rico 53.8 50.0 7.6 7.4 105.1 96.8 8.6 8.6Total LiLAC Division
370.2 232.8 59.0 10.6 726.2 355.9 104.0 (0.2 ) Corporate and other (2.2 ) (1.7 ) (29.4 ) (37.5 ) (4.3 ) (2.9 ) (48.3 ) (53.6 ) Total segment OCF $ 368.0 $ 231.1 59.2 10.5 $ 721.9 $ 353.0 104.5 (0.4 ) OCF Margin 40.0 % 38.3 % 39.4 % 38.9 %Q2 2017 Rebased OCF Growth - Segment Highlights
Net Loss - LiLAC Group
Property and Equipment Additions - LiLAC Group
Three months ended Six months ended June 30, June 30, 2017 2016 2017 2016 in millions, except % amounts Customer premises equipment $ 36.2 $ 33.1 $ 81.6 $ 71.7 New Build & Upgrade 12.0 10.7 26.6 24.5 Capacity 8.3 14.7 17.7 22.3 Baseline 8.7 17.3 16.3 22.3 Product & Enablers 5.3 4.0 7.0 10.5 CWC 100.4 53.6 160.9 53.6 Property and equipment additions $ 170.9 $ 133.4 $ 310.1 $ 204.9 Property and equipment additions as % of revenue 18.6 % 22.1 % 16.9 % 22.6 %Consolidated Statements of Cash Flows - LiLAC Group
Six months ended June 30, 2017 2016 Variance in millions Net cash provided (used) by: Operating Activities $ 299.4 $ 105.8 $ 193.6 Investing Activities $ (252.6 ) $ (170.8 ) $ (81.8 ) Financing Activities $ 2.2 $ 282.9 $ (280.7 )The inclusion of CWC in the 2017 period accounted for the majority of these changes.
Adjusted Free Cash Flow - LiLAC Group
Three months ended Six months ended June 30, June 30, 2017 2016 2017 2016 in millions Adjusted Free Cash Flow $ 114.0 $ (35.3 ) $ 56.0 $ (15.4 )Leverage and Liquidity - LiLAC Group (at June 30, 2017)
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; our expectations with respect to subscribers, revenue, ARPU per RGU, OCF and Adjusted FCF; expectations with respect to the development, enhancement and expansion of our superior networks and innovative and advanced products and services; statements regarding our planned spin-off of the businesses attributed to the LiLAC Group and the anticipated impacts and benefits of such transaction; future P&E additions as a percentage of revenue; expectations regarding our share buyback programs; the strength of our balance sheet and tenor of our third-party debt; statements regarding our JV in the Netherlands and other information and statements that are not historical fact. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. These risks and uncertainties include the continued use by subscribers and potential subscribers of our and our affiliates’ services and their willingness to upgrade to our more advanced offerings; our and our affiliates’ ability to meet challenges from competition, to manage rapid technological change or to maintain or increase rates to subscribers or to pass through increased costs to subscribers; the effects of changes in laws or regulation; general economic factors; our and our affiliates’ ability to obtain regulatory approval and satisfy regulatory conditions associated with acquisitions and dispositions; our and affiliates’ ability to successfully acquire and integrate new businesses and realize anticipated efficiencies from acquired businesses; the availability of attractive programming for our and our affiliates’ video services and the costs associated with such programming; our and our affiliates’ ability to achieve forecasted financial and operating targets; the outcome of any pending or threatened litigation; the ability of our operating companies and affiliates to access cash of their respective subsidiaries; the impact of our operating companies' and affiliates’ future financial performance, or market conditions generally, on the availability, terms and deployment of capital; fluctuations in currency exchange and interest rates; the ability of suppliers and vendors (including our third-party wireless network providers under our MVNO arrangements) to timely deliver quality products, equipment, software, services and access; our and our affiliates’ ability to adequately forecast and plan future network requirements including the costs and benefits associated with network expansions; and other factors detailed from time to time in our filings with the Securities and Exchange Commission, including our most recently filed Form 10-K, as amended, and Form 10-Q. These forward-looking statements speak only as of the date of this release. We expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
Nothing in this press release constitutes an offer of any securities for sale.
About Liberty Global
Liberty Global is the world’s largest international TV and broadband company, with operations in more than 30 countries across Europe, Latin America and the Caribbean. We invest in the infrastructure that empowers our customers to make the most of the digital revolution. Our scale and commitment to innovation enable us to develop market-leading products delivered through next-generation networks that connect our 25 million customers who subscribe to 51 million television, broadband internet and telephony services. We also serve over 10 million mobile subscribers and offer WiFi service across 10 million access points.
Liberty Global’s businesses are comprised of two stocks: the Liberty Global Group (NASDAQ: LBTYA, LBTYB and LBTYK) for our European operations, and the LiLAC Group (NASDAQ: LILA and LILAK, OTC Link: LILAB), which consists of our operations in Latin America and the Caribbean.
The Liberty Global Group operates in 12 European countries under the consumer brands Virgin Media, Unitymedia, Telenet and UPC. The Liberty Global Group also owns 50% of VodafoneZiggo, a Dutch joint venture, which has 4 million customers, 10 million fixed-line subscribers and 5 million mobile subscribers. The LiLAC Group operates in over 20 countries in Latin America and the Caribbean under the consumer brands VTR, Flow, Liberty, Más Móvil and BTC. In addition, the LiLAC Group operates a sub-sea fiber network throughout the region connecting over 40 markets.
For more information, please visit www.libertyglobal.com or contact:
Investor Relations: Corporate Communications: Oskar Nooij +1 303 220 4218 Matt Beake +44 20 8483 6428 Christian Fangmann +49 221 84 62 5151 Rebecca Pike +44 20 8483 6216 John Rea +1 303 220 4238Footnotes
1 The Liberty Global ordinary shares and the LiLAC ordinary shares are tracking shares. Tracking shares are intended by the issuing company to reflect or “track” the economic performance of a particular business or “group,” rather than the economic performance of the company as a whole. The Liberty Global ordinary shares and the LiLAC ordinary shares are intended to “track” the economic performance of the Liberty Global Group and the LiLAC Group, respectively (each as defined and described below). For more information regarding the tracking shares, see note 1 to our condensed consolidated financial statements included in our Form 10-Q. While the LiLAC Group and the Liberty Global Group have separate collections of businesses, assets and liabilities attributed to them, neither group is a separate legal entity. The LiLAC Group comprises our operations in Latin America and the Caribbean and has attributed to it CWC, VTR and Liberty Puerto Rico. The Liberty Global Group comprises our businesses, assets and liabilities not attributed to the LiLAC Group, including Virgin Media, Unitymedia, UPC Holding, Telenet and, through December 31, 2016, Ziggo Group Holding. The condensed consolidated financial statements of Liberty Global are included in our Form 10-Q. For attributed financial information of the Liberty Global Group and the LiLAC Group, see Exhibit 99.1 to our Form 10-Q. 2Please see Footnotes for Operating Data and Subscriber Variance Tables for the definition of RGUs. Organic figures exclude RGUs of acquired entities at the date of acquisition and other nonorganic adjustments, but include the impact of changes in RGUs from the date of acquisition. All subscriber/RGU additions or losses refer to net organic changes, unless otherwise noted.
3 As we no longer consolidate the Netherlands effective December 31, 2016, we have removed the Netherlands from certain information presented for periods prior to December 31, 2016 to enhance comparability. 4 Our next-generation video base consists of Horizon TV, TiVo (in the U.K.), Digital TV with a Horizon-like user interface (Yelo in Belgium) as well as Horizon-Lite set-top boxes. 5Please see Revenue and Operating Cash Flow for information on rebased growth.
6Please see OCF Definition and Reconciliation for our Operating Cash Flow ("OCF") definition and the required reconciliations.
7 Total B2B includes subscription (SOHO) and non-subscription revenue. 8 Average Revenue Per Unit (“ARPU”) refers to the average monthly subscription revenue (subscription revenue excludes interconnect, channel carriage fees, mobile handset sales, late fees and installation fees) per average customer relationship or mobile subscriber, as applicable. ARPU per average customer relationship is calculated by dividing the average monthly subscription revenue from residential cable and SOHO services by the average of the opening and closing balances for customer relationships for the period. ARPU per average mobile subscriber is calculated by dividing residential mobile and SOHO revenue for the indicated period by the average of the opening and closing balances for mobile subscribers for the period. Unless otherwise indicated, ARPU per 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 of the opening and closing balances of the applicable RGUs for the period. Unless otherwise noted, ARPU in this release is considered to be ARPU per average customer relationship or mobile subscriber, as applicable. Customer relationships, mobile subscribers and RGUs of entities acquired during the period are normalized. 9 Please see Liberty Global's 8-K/A filed on March 28, 2017. 10 On May 16, 2016, we acquired Cable & Wireless Communications Limited ("CWC"). 11 A reconciliation of our LiLAC OCF guidance for 2017 to a U.S. GAAP measure is not provided due to the fact that not all elements of the reconciliation is projected as part of our forecasting process, as certain items may vary significantly from one period to another. For example, impairments or other operating charges such as direct acquisition costs are contingent upon the underlying activity, which cannot be reasonably forecasted. FX rates as of February 12, 2017. 12 Our blended fully-swapped debt borrowing cost represents the weighted average interest rate on our aggregate variable- and fixed-rate indebtedness (excluding capital leases and including vendor financing obligations), including the effects of derivative instruments, original issue premiums or discounts and commitment fees, but excluding the impact of financing costs. 13 For purposes of calculating our average tenor, total third-party debt excludes vendor financing. 14 Liquidity refers to cash and cash equivalents plus the maximum undrawn commitments under subsidiary borrowing facilities, without regard to covenant compliance calculations. 15Please see Footnotes for Operating Data and Subscriber Variance Tables for the definition of mobile subscribers.
16 Our residential fixed business consists of our fixed-line triple-play and DTH businesses, but excludes SOHO services. Residential fixed also excludes the framework services revenue from the VodafoneZiggo JV and our small Irish broadcasting businesses. 17Please see Adjusted Free Cash Flow Definition and Reconciliation for information on Adjusted Free Cash Flow (“FCF”) and the required reconciliations. For more detailed information concerning our operating, investing and financing cash flows, see the condensed consolidated statements of cash flows included in our Form 10-Q. A reconciliation of our 2017 FCF guidance to a U.S. GAAP measure is not provided due to the fact that not all elements of the reconciliation are projected as part of our forecasting process, as certain items may vary significantly from one period to another. Adjusted FCF guidance is based on FX rates as of February 12, 2017.
18Please see Footnotes for Operating Data and Subscriber Variance Tables for the definition of Customer Relationships.
19 On February 11, 2016, Telenet acquired Telenet Group BVBA ("BASE"). 20 OCF margin is calculated by dividing OCF by total revenue for the applicable period. 21 Our property and equipment additions include our capital expenditures on an accrual basis and amounts financed under vendor financing or capital lease arrangements. 22 Our gross and net debt ratios are defined as total debt and net debt to annualized OCF of the latest quarter. Net debt is defined as total debt less cash and cash equivalents. For purposes of these calculations, debt is measured using swapped foreign currency rates, consistent with the covenant calculation requirements of our subsidiary debt agreements, and, in the case of the Liberty Global Group, excludes the loans backed or secured by the shares we hold in ITV plc, Sumitomo Corporation and Lions Gate Entertainment Corp. For Liberty Global Group, our gross and net leverage ratios are adjusted to reflect the €600 million ($685 million) redemption of certain UPC Holding senior notes that took place on July 7, 2017. The net proceeds from the June financing transaction used to redeem these notes were held in escrow at June 30, 2017. 23 Our aggregate unused borrowing capacity of $4.6 billion represents the maximum undrawn commitments under our subsidiaries' applicable facilities without regard to covenant compliance calculations. This consists of $3.6 billion attributed to the Liberty Global Group and $1.0 billion attributed to the LiLAC Group. Upon completion of the relevant June 30, 2017 compliance reporting requirements for our credit facilities, and assuming no further changes from quarter-end borrowing levels, with the exception of (i) the €600 million ($685 million) redemption of certain UPC Holding senior notes that took place on July 7, 2017 and (ii) the July 3, 2017 drawdown of $50.0 million under the CWC Revolving Credit Facility and the removal of the limitation related to letters of credit issued in connection with certain CWC pension obligations, we anticipate that our subsidiaries' borrowing capacity would be $4.5 billion. This consists of $3.5 billion attributed to the Liberty Global Group and $958 million attributed to the LiLAC Group. LiLAC cash of $599 million includes $325 million of cash held by CWC, substantially all of which is held by CWC subsidiaries. For information regarding limitations on CWC's ability to access this cash, see the discussion under "Material Changes in Financial Condition" in our Form 10-Q.Balance Sheets, Statements of Operations and Statements of Cash Flows
The consolidated balance sheets, statements of operations and statements of cash flows of Liberty Global are included in our 10-Q. For attributed financial information of the Liberty Global Group and the LiLAC Group, see Exhibit 99.1 to our 10-Q.
Rebase Information
For purposes of calculating rebased growth rates on a comparable basis for all businesses that we owned during 2017, we have adjusted our historical revenue and OCF for the three and six months ended June 30, 2016 to (i) include the pre-acquisition revenue and OCF of certain entities acquired during 2016 and 2017 in our rebased amounts for the three and six months ended June 30, 2016 to the same extent that the revenue and OCF of such entities are included in our results for the three and six months ended June 30, 2017, (ii) exclude the revenue and OCF of Ziggo Group Holding and a sports channel that were contributed to the VodafoneZiggo JV at the end of December 31, 2016, (iii) include revenue for the framework services agreement with the VodafoneZiggo JV and certain associated operating and SG&A expenses that had been allocated to our Netherlands segment during the 2016 periods in our rebased amounts for the three and six months ended June 30, 2016 as if the framework services agreement had been in place at the beginning of 2016, (iv) exclude the revenue and OCF of multi-channel multi-point (microwave) distribution system subscribers in Ireland that have disconnected since we announced the switch-off of this service effective April 2016 for the six months ended June 30, 2016 to the same extent that the revenue and OCF of these subscribers is excluded from our results for the six months ended June 30, 2017 (v) exclude the revenue and OCF of two small disposals made in Belgium during Q1 2017 to the same extent that the revenue and OCF of these disposed businesses is excluded from our results for the three and six months ended June 30, 2017 and (vi) reflect the translation of our rebased amounts for the three and six months ended June 30, 2016 at the applicable average foreign currency exchange rates that were used to translate our results for the three and six months ended June 30, 2017. We have included CWC, SFR and five small entities in whole or in part in the determination of our rebased revenue and OCF for the three months ended June 30, 2016. We have included CWC, SFR, BASE and five small entities in whole or in part in the determination of our rebased revenue and OCF for the six months ended June 30, 2016. We have reflected the revenue and OCF of the acquired entities in our 2016 rebased amounts based on what we believe to be the most reliable information that is currently available to us (generally pre-acquisition financial statements), as adjusted for the estimated effects of (a) any significant differences between Generally Accepted Accounting Principles in the United States (“U.S. GAAP”) and local generally accepted accounting principles, (b) any significant effects of acquisition accounting adjustments, (c) any significant differences between our accounting policies and those of the acquired entities and (d) other items we deem appropriate. We do not adjust pre-acquisition periods to eliminate nonrecurring items or to give retroactive effect to any changes in estimates that might be implemented during post-acquisition periods. As we did not own or operate the acquired businesses during the pre-acquisition periods, no assurance can be given that we have identified all adjustments necessary to present the revenue and OCF of these entities on a basis that is comparable to the corresponding post-acquisition amounts that are included in our historical results or that the pre-acquisition financial statements we have relied upon do not contain undetected errors. The adjustments reflected in our rebased amounts have not been prepared with a view towards complying with Article 11 of Regulation S-X. In addition, the rebased growth percentages are not necessarily indicative of the revenue and OCF that would have occurred if these transactions had occurred on the dates assumed for purposes of calculating our rebased amounts or the revenue and OCF that will occur in the future. The rebased growth percentages have been presented as a basis for assessing growth rates on a comparable basis, and are not presented as a measure of our pro forma financial performance.
The following table provides adjustments made to the 2016 amounts to derive our rebased growth rates for the Liberty Global Group and the LiLAC Group:
Revenue OCFThree monthsended June 30,
Six monthsended June 30,
Three monthsended June 30,
Six monthsended June 30,
2016 2016 2016 2016 Liberty Global Group in millions Acquisitions $ 18.1 $ 104.2 $ 0.2 $ 13.9 Contribution of Ziggo Group Holding to the VodafoneZiggo JV and other dispositions (a) (659.7 ) (1,308.9 ) (341.5 ) (686.4 ) Foreign Currency (224.9 ) (501.3 ) (97.7 ) (218.1 ) Total decrease $ (866.5 ) $ (1,706.0 ) $ (439.0 ) $ (890.6 ) LiLAC Group Acquisitions $ 296.9 $ 902.5 $ 101.6 $ 368.8 Foreign Currency (0.7 ) 7.6 0.2 2.8 Total increase $ 296.2 $ 910.1 $ 101.8 $ 371.6 (a) In connection with the December 31, 2016 closing of the VodafoneZiggo JV transaction, we entered into a Framework Agreement that provides for the terms under which we provide services to the VodafoneZiggo JV. These adjustments to revenue and OCF are net of $32 million and $63 million of revenue for Q2 and YTD 2016, respectively, that we assumed would have been earned if the Framework Agreement had been in place on January 1, 2016.OCF Definition and Reconciliation
As used herein, OCF has the same meaning as the term "Adjusted OIBDA" that is referenced in our Form 10-Q. OCF is the primary measure used by our chief operating decision maker to evaluate segment operating performance. OCF is also a key factor that is used by our internal decision makers to (i) determine how to allocate resources to segments and (ii) evaluate the effectiveness of our management for purposes of annual and other incentive compensation plans. As we use the term, OCF is defined as operating income before depreciation and amortization, share-based compensation, provisions and provision releases related to significant litigation and impairment, restructuring and other operating items. Other operating items include (a) gains and losses on the disposition of long-lived assets, (b) third-party costs directly associated with successful and unsuccessful acquisitions and dispositions, including legal, advisory and due diligence fees, as applicable, and (c) other acquisition-related items, such as gains and losses on the settlement of contingent consideration. Our internal decision makers believe OCF is a meaningful measure because it represents a transparent view of our recurring operating performance that is unaffected by our capital structure and allows management to (1) readily view operating trends, (2) perform analytical comparisons and benchmarking between segments and (3) identify strategies to improve operating performance in the different countries in which we operate. We believe our OCF measure is useful to investors because it is one of the bases for comparing our performance with the performance of other companies in the same or similar industries, although our measure may not be directly comparable to similar measures used by other public companies. OCF should be viewed as a measure of operating performance that is a supplement to, and not a substitute for, operating income, net earnings or loss, cash flow from operating activities and other U.S. GAAP measures of income or cash flows. A reconciliation of our operating income to total segment OCF is presented in the following table:
Three months ended Six months ended June 30, June 30, 2017 2016 2017 2016 in millions Consolidated Liberty Global Operating income $ 641.9 $ 487.8 $ 1,211.1 $ 1,074.4 Share-based compensation expense 56.4 74.6 95.4 143.6 Depreciation and amortization 1,371.4 1,553.0 2,693.6 2,988.5 Impairment, restructuring and other operating items, net 31.6 190.3 59.8 214.7 Total segment OCF $ 2,101.3 $ 2,305.7 $ 4,059.9 $ 4,421.2 Liberty Global Group Operating income $ 483.2 $ 508.7 $ 914.4 $ 1,035.3 Share-based compensation expense 53.4 71.4 86.8 138.6 Inter-group fees and allocations (3.0 ) (2.1 ) (6.0 ) (4.2 ) Depreciation and amortization 1,178.5 1,426.9 2,306.8 2,810.1 Impairment, restructuring and other operating items, net 21.2 69.7 36.0 88.4 Total segment OCF $ 1,733.3 $ 2,074.6 $ 3,338.0 $ 4,068.2 LiLAC Group Operating income (loss) $ 158.7 $ (20.9 ) $ 296.7 $ 39.1 Share-based compensation expense 3.0 3.2 8.6 5.0 Inter-group fees and allocations 3.0 2.1 6.0 4.2 Depreciation and amortization 192.9 126.1 386.8 178.4 Impairment, restructuring and other operating items, net 10.4 120.6 23.8 126.3 Total segment OCF $ 368.0 $ 231.1 $ 721.9 $ 353.0Summary of Debt, Capital Lease Obligations and Cash and Cash Equivalents
The following table1 details the U.S. dollar equivalent balances of the outstanding principal amount of our debt, capital lease obligations and cash and cash equivalents at June 30, 2017:
Capital Debt & Capital Cash Lease Lease and Cash Debt2 Obligations Obligations Equivalents in millions Liberty Global and Liberty Global Group unrestricted subsidiaries $ 2,254.0 $ 71.9 $ 2,325.9 $ 991.6 Virgin Media3 15,461.2 77.2 15,538.4 46.6 UPC Holding 7,892.2 91.1 7,983.3 22.0 Unitymedia 8,531.3 698.4 9,229.7 3.2 Telenet 5,229.8 415.7 5,645.5 27.3 Total Liberty Global Group 39,368.5 1,354.3 40,722.8 1,090.7 LiLAC Group unrestricted subsidiaries — — — 58.6 CWC 3,729.1 19.9 3,749.0 325.1 VTR Finance 1,473.1 0.9 1,474.0 165.2 Liberty Puerto Rico 942.5 — 942.5 50.0 Total LiLAC Group 6,144.7 20.8 6,165.5 598.9Total
$ 45,513.2 $ 1,375.1 $ 46,888.3 $ 1,689.6Property and Equipment Additions and Capital Expenditures
The tables below highlight the categories of the property and equipment additions attributed to the Liberty Global Group and the LiLAC Group for the indicated periods and reconcile those additions to the capital expenditures that are presented in the attributed statement of cash flows information included in Exhibit 99.1 to our 10-Q.
Liberty Global Group
Three months ended Six months ended June 30, June 30, 2017 2016 2017 2016 in millions, except % amounts Customer premises equipment $ 304.2 $ 229.9 $ 600.2 $ 466.1 New Build & Upgrade 305.5 203.6 495.3 354.6 Capacity 163.0 159.8 279.6 266.1 Baseline 200.9 219.2 357.2 393.7 Product & Enablers 230.2 142.9 355.9 260.3 Property and equipment additions (excluding the Netherlands(3)) 1,203.8 955.4 2,088.2 1,740.8 The Netherlands — 143.1 — 283.2 Total property and equipment additions 1,203.8 1,098.5 2,088.2 2,024.0 Reconciliation of property and equipment additions to capital expenditures: Excluding the Netherlands: Assets acquired under capital-related vendor financing arrangements4 (664.1 ) (424.1 ) (1,278.5 ) (822.6 ) Assets acquired under capital leases (72.5 ) (13.7 ) (103.9 ) (41.6 ) Changes in current liabilities related to capital expenditures (23.0 ) (81.9 ) 238.8 28.5 The Netherlands — (71.4 ) — (93.8 ) Total capital expenditures5 $ 444.2 $ 507.4 $ 944.6 $ 1,094.5 Property and equipment additions as % of revenue (excluding the Netherlands(3)) 32.9 % 25.2 % 29.1 % 23.5 %LiLAC Group
Three months ended Six months ended June 30, June 30, 2017 2016 2017 2016 in millions, except % amounts Customer premises equipment $ 36.2 $ 33.1 $ 81.6 $ 71.7 New Build & Upgrade 12.0 10.7 26.6 24.5 Capacity 8.3 14.7 17.7 22.3 Baseline 8.7 17.3 16.3 22.3 Product & Enablers 5.3 4.0 7.0 10.5 CWC P&E Additions 100.4 53.6 160.9 53.6 Property and equipment additions 170.9 133.4 310.1 204.9 Assets acquired under capital-related vendor financing arrangements (20.1 ) (17.0 ) (34.2 ) (17.0 ) Assets acquired under capital leases (1.6 ) (0.2 ) (2.5 ) (0.2 ) Changes in current liabilities and cash derivatives related to capital expenditures (25.3 ) 15.4 (25.1 ) (6.1 ) Capital expenditures $ 123.9 $ 131.6 $ 248.3 $ 181.6 Property and equipment additions as % of revenue 18.6 % 22.1 % 16.9 % 22.6 %______________________________
1 Except as otherwise indicated, the amounts reported in the table include the named entity and its subsidiaries. 2 Debt amounts for UPC Holding and Telenet include notes issued by special purpose entities that are consolidated by the respective subsidiary. 3 The Virgin Media borrowing group includes certain subsidiaries of Virgin Media, but excludes Virgin Media 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 Liberty Global Group unrestricted subsidiaries. 4 Amounts exclude related VAT of $103 million and $73 million during the three months ended June 30, 2017 and 2016, respectively, and $201 million and $129 million during the six months ended June 30, 2017 and 2016, respectively, that were also financed by our vendors under these arrangements. 5 The capital expenditures that we report in our condensed consolidated statements of cash flows do not include amounts that are financed under vendor financing or capital lease arrangements. Instead, these expenditures are reflected as non-cash additions to our property and equipment when the underlying assets are delivered, and as repayments of debt when the related principal is repaid.Adjusted Free Cash Flow Definition and Reconciliation
We define Adjusted Free Cash Flow as net cash provided by our operating activities, plus (i) cash payments for third-party costs directly associated with successful and unsuccessful acquisitions and dispositions and (ii) expenses financed by an intermediary, less (a) capital expenditures, as reported in our consolidated statements of cash flows, (b) principal payments on amounts financed by vendors and intermediaries and (c) principal payments on capital leases (exclusive of the portions of the network lease in Belgium and the duct leases in Germany that we assumed in connection with certain acquisitions), with each item excluding any cash provided or used by our discontinued operations. We believe that our presentation of Adjusted Free Cash Flow provides useful information to our investors because this measure can be used to gauge our ability to service debt and fund new investment opportunities. Adjusted Free Cash Flow should not be understood to represent our ability to fund discretionary amounts, as we have various mandatory and contractual obligations, including debt repayments, which are not deducted to arrive at this amount. Investors should view Adjusted Free Cash Flow as a supplement to, and not a substitute for, U.S. GAAP measures of liquidity included in our consolidated statements of cash flows. We changed our definition of adjusted free cash flow effective January 1, 2017 to remove the add-back of excess tax benefits from share-based compensation. This change, which was given effect for all periods presented, was made to accommodate our January 1, 2017 adoption of ASU 2016-09, Compensation - Stock Compensation, Improvements to Employee Share-Based Payment Accounting, pursuant to which we retrospectively revised the presentation of our condensed consolidated statements of cash flows to remove the operating cash outflows and financing cash inflows associated with excess tax benefits from share-based compensation. The following table provides the reconciliation of our net cash provided by operating activities to Adjusted Free Cash Flow for the indicated periods:
Three months ended Six months ended June 30, June 30, 2017 2016 2017 2016 in millions Consolidated Liberty Global Net cash provided by operating activities $ 1,732.2 $ 1,579.1 $ 2,710.9 $ 2,669.8 Cash payments for direct acquisition and disposition costs 4.8 77.8 7.5 86.0 Expenses financed by an intermediary6 383.9 239.7 692.0 393.2 Capital expenditures (568.1 ) (639.0 ) (1,192.9 ) (1,276.1 ) Principal payments on amounts financed by vendors and intermediaries (1,088.3 ) (748.0 ) (2,121.3 ) (1,420.9 ) Principal payments on certain capital leases (25.4 ) (28.5 ) (47.7 ) (55.9 ) Adjusted FCF $ 439.1 $ 481.1 $ 48.5 $ 396.1 Liberty Global Group Net cash provided by operating activities $ 1,508.7 $ 1,543.2 $ 2,411.5 $ 2,564.0 Cash payments for direct acquisition and disposition costs 4.2 16.8 6.0 24.9 Expenses financed by an intermediary 346.8 239.7 644.6 393.2 Capital expenditures (444.2 ) (507.4 ) (944.6 ) (1,094.5 ) Principal payments on amounts financed by vendors and intermediaries (1,067.1 ) (748.0 ) (2,081.3 ) (1,420.9 ) Principal payments on certain capital leases (23.3 ) (27.9 ) (43.7 ) (55.2 ) Adjusted FCF $ 325.1 $ 516.4 $ (7.5 ) $ 411.5 LiLAC Group Net cash provided by operating activities $ 223.5 $ 35.9 $ 299.4 $ 105.8 Cash payments for direct acquisition and disposition costs 0.6 61.0 1.5 61.1 Expenses financed by an intermediary 37.1 — 47.4 — Capital expenditures (123.9 ) (131.6 ) (248.3 ) (181.6 ) Principal payments on amounts financed by vendors and intermediaries (21.2 ) — (40.0 ) — Principal payments on certain capital leases (2.1 ) (0.6 ) (4.0 ) (0.7 ) Adjusted FCF $ 114.0 $ (35.3 ) $ 56.0 $ (15.4 )______________________________
6 For purposes of our consolidated statements of cash flows, expenses financed by an intermediary are treated as hypothetical operating cash outflows and hypothetical financing cash inflows when the expenses are incurred. When we pay the financing intermediary, we record financing cash outflows in our consolidated statements of cash flows. For purposes of our Adjusted Free Cash Flow definition, we add back the hypothetical operating cash outflow when these financed expenses are incurred and deduct the financing cash outflows when we pay the financing intermediary.ARPU per Customer Relationship
The following table provides ARPU per customer relationship for the indicated periods:
Three months ended June 30, % FX-Neutral7 2017 2016 Change % Change Liberty Global Consolidated (excluding the Netherlands(3))* $ 41.75 $ 43.83 (4.7 %) 1.5 % Liberty Global Group (excluding the Netherlands(3)) € 37.39 € 38.04 (1.7 %) 1.2 % U.K. & Ireland (Virgin Media) £ 49.70 £ 49.61 0.2 % (0.4 %) Germany (Unitymedia) € 25.11 € 24.24 3.6 % 3.6 % Belgium (Telenet) € 54.93 € 53.43 2.8 % 2.8 % Other Europe (UPC Holding) € 27.09 € 26.76 1.2 % (0.1 %) LiLAC Group* $ 52.28 $ 52.23 0.1 % (1.0 %) Chile (VTR) CLP 33,831 CLP 33,078 2.3 % 2.3 % CWC* $ 42.53 $ 39.75 7.0 % 8.5 % Puerto Rico $ 79.84 $ 79.54 0.4 % 0.4 %N.M. - Not Meaningful
______________________________
7The FX-neutral change represents the percentage change on a year-over-year basis adjusted for FX impacts and is calculated by adjusting the prior-year figures to reflect translation at the foreign currency rates used to translate the current year amounts.
Mobile ARPU
The following tables provide ARPU per mobile subscriber8 for the indicated periods:
ARPU per Mobile Subscriber Three months ended June 30, % FX-Neutral 2017 2016 Change % Change Liberty Global Group: Including interconnect revenue $ 17.94 $ 20.10 (10.7 %) (3.5 %) Excluding interconnect revenue $ 14.83 $ 16.54 (10.3 %) (2.8 %) LiLAC Group*: Including interconnect revenue $ 16.70 $ 17.68 (5.5 %) (5.8 %) Excluding interconnect revenue $ 15.46 $ 16.47 (6.1 %) (6.4 %)______________________________
8Our ARPU per mobile subscriber calculation that excludes interconnect revenue refers to the average monthly mobile subscription revenue per average mobile subscriber in service and is calculated by dividing the average monthly mobile subscription revenue (excluding activation fees, handset sales and late fees) for the indicated period, by the average of the opening and closing balances of mobile subscribers in service for the period. Our ARPU per mobile subscriber calculation that includes interconnect revenue increases the numerator in the above-described calculation by the amount of mobile interconnect revenue during the period.
*As a part of our ongoing effort to conform CWC's subscriber counting policies to our policies, we have reflected nonorganic reductions totaling 224,000 to CWC's customer count during the twelve months ended June 30, 2017. In order to provide a more meaningful comparison of ARPU, we have reflected all of these nonorganic reductions in the customer figures used to calculate ARPU for the three months ended June 30, 2017 and 2016.
RGUs, Customers and Bundling9
The following table provides information on the breakdown of our RGUs and customer base and highlights our customer bundling metrics at June 30, 2017 and March 31, 2017:
June 30,2017
March 31,2017
Q2’17 / Q1’17(% Change)
Liberty Global Group
Total RGUs Video RGUs 18,546,700 18,472,500 0.4 % Broadband Internet RGUs 14,652,600 14,486,300 1.1 % Telephony RGUs 12,194,300 12,065,900 1.1 % Total Liberty Global Group 45,393,600 45,024,700 0.8 % Customers Single-Play Customers 8,262,300 8,330,700 (0.8 %) Dual-Play Customers 3,956,500 3,925,700 0.8 % Triple-Play Customers 9,739,500 9,614,200 1.3 % Total Liberty Global Group 21,958,300 21,870,600 0.4 % Bundling % of Single-Play Customers 37.6 % 38.1 % (1.3 %) % of Dual-Play Customers 18.0 % 17.9 % 0.6 % % of Triple-Play Customers 44.4 % 44.0 % 0.9 % RGUs per customer relationship 2.07 2.06 0.5 %LiLAC Group
Total RGUs Video RGUs 1,714,200 1,717,100 (0.2 %) Broadband Internet RGUs 2,061,600 2,061,500 — % Telephony RGUs 1,452,700 1,639,300 (11.4 %) Total LiLAC Group 5,228,500 5,417,900 (3.5 %) Customers Single-Play Customers 1,116,300 1,271,800 (12.2 %) Dual-Play Customers 781,100 801,200 (2.5 %) Triple-Play Customers 850,000 847,900 0.2 % Total LiLAC Group 2,747,400 2,920,900 (5.9 %) Bundling % of Single-Play Customers 40.7 % 43.6 % (6.7 %) % of Dual-Play Customers 28.4 % 27.4 % 3.6 % % of Triple-play Customers 30.9 % 29.0 % 6.6 % RGUs per customer relationship 1.90 1.85 2.7 %______________________________
9The June 30, 2017 and March 31, 2017 figures for the Liberty Global Group do not include Ziggo Group Holding, which was contributed to the VodafoneZiggo JV on December 31, 2016.
Consolidated Operating Data — June 30, 2017
VideoHomesPassed(1)
Two-wayHomesPassed(2)
Fixed-lineCustomerRelationships(3)
Basic VideoSubscribers(5)
EnhancedVideoSubscribers(6)
DTHSubscribers(7)
TotalVideo
InternetSubscribers(8)
TelephonySubscribers(9)
TotalRGUs(4)
Total MobileSubscribers(11)
U.K. 13,675,600 13,663,500 5,373,000 — 3,809,800 — 3,809,800 5,028,300 4,437,100 13,275,200 2,995,600 Germany 12,935,600 12,831,100 7,175,000 4,756,700 1,632,800 — 6,389,500 3,389,500 3,166,200 12,945,200 340,400 Belgium/Luxembourg 3,328,000 3,328,000 2,212,400 265,500 1,796,500 — 2,062,000 1,668,400 1,304,000 5,034,400 2,838,700 Switzerland(10) 2,255,900 2,255,900 1,271,400 560,900 671,900 — 1,232,800 752,600 524,300 2,509,700 92,500 Austria 1,399,000 1,399,000 652,400 99,600 372,500 — 472,100 508,500 441,700 1,422,300 47,200 Ireland 865,900 822,700 452,100 27,500 269,000 — 296,500 366,100 354,900 1,017,500 40,500 Total Western Europe 34,460,000 34,300,200 17,136,300 5,710,200 8,552,500 — 14,262,700 11,713,400 10,228,200 36,204,300 6,354,900 Poland 3,224,100 3,164,000 1,429,200 198,200 1,013,900 — 1,212,100 1,117,500 627,900 2,957,500 4,600 Romania 2,984,800 2,940,800 1,297,100 254,100 654,900 352,100 1,261,100 553,700 503,200 2,318,000 — Hungary 1,748,500 1,731,000 1,111,200 109,400 563,700 277,900 951,000 654,600 605,100 2,210,700 74,700 Czech Republic 1,498,700 1,465,400 715,600 159,500 355,300 105,100 619,900 486,400 152,700 1,259,000 — Slovakia 596,100 576,500 268,900 25,300 138,400 76,200 239,900 127,000 77,200 444,100 — Total CEE 10,052,200 9,877,700 4,822,000 746,500 2,726,200 811,300 4,284,000 2,939,200 1,966,100 9,189,300 79,300Total Liberty Global Group
44,512,200 44,177,900 21,958,300 6,456,700 11,278,700 811,300 18,546,700 14,652,600 12,194,300 45,393,600 6,434,200 Chile 3,319,300 2,817,200 1,375,500 73,000 992,100 — 1,065,100 1,143,400 646,200 2,854,700 193,000 Puerto Rico 1,103,600 1,103,600 405,900 — 258,700 — 258,700 334,200 210,300 803,200 — Panama 528,400 472,100 187,600 — 45,200 36,200 81,400 101,300 124,500 307,200 1,765,300 Jamaica 426,500 416,500 261,200 — 95,200 — 95,200 148,200 196,200 439,600 933,900 Trinidad 312,900 312,900 161,100 — 111,600 — 111,600 123,400 38,000 273,000 — Barbados 123,100 123,100 97,400 — 17,400 — 17,400 61,900 77,600 156,900 125,600 Bahamas 128,900 128,900 52,000 — 5,500 — 5,500 27,200 52,000 84,700 285,200 Other CWC 356,300 336,500 206,700 11,300 68,000 — 79,300 122,000 107,900 309,200 391,300 Total LiLAC Group 6,299,000 5,710,800 2,747,400 84,300 1,593,700 36,200 1,714,200 2,061,600 1,452,700 5,228,500 3,694,300 Grand Total 50,811,200 49,888,700 24,705,700 6,541,000 12,872,400 847,500 20,260,900 16,714,200 13,647,000 50,622,100 10,128,500Subscriber Variance Table - June 30, 2017 vs March 31, 2017
VideoHomesPassed(1)
Two-wayHomesPassed(2)
Fixed-lineCustomerRelationships(3)
Basic VideoSubscribers(5)
Enhanced VideoSubscribers(6)
DTHSubscribers(7)
TotalVideo
InternetSubscribers(8)
TelephonySubscribers(9)
TotalRGUs(4)
Total MobileSubscribers(11)
U.K. 121,200 121,300 21,500 — 34,500 — 34,500 30,900 11,400 76,800 (20,100 ) Germany 19,400 23,700 1,500 (41,100 ) 33,300 — (7,800 ) 32,400 29,200 53,800 (6,300 ) Belgium/Luxembourg 331,300 331,300 78,200 (3,200 ) 68,900 — 65,700 60,300 45,800 171,800 1,200 Switzerland(10) 4,800 4,800 (10,000 ) (8,100 ) (300 ) — (8,400 ) 8,100 6,400 6,100 7,200 Austria 4,500 4,500 (800 ) (10,000 ) 4,900 — (5,100 ) 2,600 7,000 4,500 8,200 Ireland 9,600 10,600 (400 ) (900 ) (500 ) — (1,400 ) 1,700 1,000 1,300 12,600 Total Western Europe 490,800 496,200 90,000 (63,300 ) 140,800 — 77,500 136,000 100,800 314,300 2,800 Poland 40,000 40,400 (1,300 ) (5,200 ) 3,400 — (1,800 ) 6,000 (2,300 ) 1,900 (300 ) Romania 62,300 63,800 6,200 (900 ) 7,500 (4,300 ) 2,300 9,700 14,900 26,900 — Hungary 10,400 10,400 4,200 (9,000 ) 18,100 (6,900 ) 2,200 13,000 15,300 30,500 7,600 Czech Republic 14,700 14,700 (1,400 ) 6,600 100 (4,000 ) 2,700 4,900 5,800 13,400 — Slovakia 7,400 9,700 (10,000 ) (1,800 ) (6,500 ) (400 ) (8,700 ) (3,300 ) (6,100 ) (18,100 ) — Total CEE 134,800 139,000 (2,300 ) (10,300 ) 22,600 (15,600 ) (3,300 ) 30,300 27,600 54,600 7,300Total Liberty Global Group
625,600 635,200 87,700 (73,600 ) 163,400 (15,600 ) 74,200 166,300 128,400 368,900 10,100 Chile 47,800 58,600 22,700 (2,700 ) 14,900 — 12,200 25,600 (4,000 ) 33,800 14,300 Puerto Rico 8,600 8,600 (800 ) — (2,200 ) — (2,200 ) 300 (600 ) (2,500 ) — Panama 600 18,900 (155,700 ) — 2,700 (6,300 ) (3,600 ) 3,600 (151,400 ) (151,400 ) (17,900 ) Jamaica 2,200 2,200 (33,700 ) — (2,800 ) — (2,800 ) (26,200 ) (27,600 ) (56,600 ) (1,000 ) Trinidad 1,200 1,200 (2,300 ) — (2,500 ) — (2,500 ) (100 ) 4,600 2,000 — Barbados 600 600 7,900 — (700 ) — (700 ) (1,100 ) (1,900 ) (3,700 ) (3,000 ) Bahamas — — (2,700 ) — 1,800 — 1,800 400 (2,700 ) (500 ) (24,200 ) Other — — (8,900 ) (700 ) (4,400 ) — (5,100 ) (2,400 ) (3,000 ) (10,500 ) (6,000 ) Total LiLAC Group 61,000 90,100 (173,500 ) (3,400 ) 6,800 (6,300 ) (2,900 ) 100 (186,600 ) (189,400 ) (37,800 ) Grand Total 686,600 725,300 (85,800 ) (77,000 ) 170,200 (21,900 ) 71,300 166,400 (58,200 ) 179,500 (27,700 )Continued below
Subscriber Variance Table - June 30, 2017 vs March 31, 2017
VideoHomes Passed(1)
Two-wayHomes Passed(2)
Fixed-lineCustomer Relationships(3)
Basic Video Subscribers(5)EnhancedVideo Subscribers(6)
DTH Subscribers(7) TotalVideo Internet Subscribers(8) Telephony Subscribers(9) Total RGUs(4) Total Mobile Subscribers(11)Organic Change Summary:
U.K. 121,200 121,300 21,500 — 34,500 — 34,500 30,900 11,400 76,800 (20,100 ) Germany 19,400 23,700 1,500 (41,100 ) 33,300 — (7,800 ) 32,400 29,200 53,800 (6,300 ) Belgium/Luxembourg 12,200 12,200 (12,600 ) (10,500 ) (4,700 ) — (15,200 ) 1,400 (1,500 ) (15,300 ) (3,100 ) Other Europe 146,700 151,900 (24,600 ) (33,200 ) 21,200 (15,600 ) (27,600 ) 35,400 38,800 46,600 35,300 Total Liberty Global Group 299,500 309,100 (14,200 ) (84,800 ) 84,300 (15,600 ) (16,100 ) 100,100 77,900 161,900 5,800 Chile 47,800 58,600 22,700 (2,700 ) 14,900 — 12,200 25,600 (4,000 ) 33,800 14,300 Puerto Rico 8,600 8,600 (800 ) — (2,200 ) — (2,200 ) 300 (600 ) (2,500 ) — Panama 600 18,900 5,200 — 2,700 2,900 5,600 3,600 300 9,500 (17,900 ) Jamaica 2,200 2,200 (13,100 ) — (2,800 ) — (2,800 ) (3,100 ) (6,500 ) (12,400 ) 2,900 Trinidad 1,200 1,200 (2,300 ) — (2,500 ) — (2,500 ) (100 ) 4,600 2,000 — Barbados 600 600 7,900 — (700 ) — (700 ) (1,100 ) (1,900 ) (3,700 ) (3,000 ) Bahamas — — (2,700 ) — 1,800 — 1,800 400 (2,700 ) (500 ) (24,200 ) Other — — (8,900 ) (700 ) (4,400 ) — (5,100 ) (2,400 ) (3,000 ) (10,500 ) (6,000 ) Total LiLAC Group 61,000 90,100 8,000 (3,400 ) 6,800 2,900 6,300 23,200 (13,800 ) 15,700 (33,900 ) Total Organic Change 360,500 399,200 (6,200 ) (88,200 ) 91,100 (12,700 ) (9,800 ) 123,300 64,100 177,600 (28,100 )Q2 2017 Adjustments:
Q2 2017 Acquisition - Hungary — — 7,100 400 5,500 — 5,900 5,300 3,200 14,400 — Q2 2017 Acquisition - Romania 7,000 7,000 4,000 3,500 — — 3,500 2,000 — 5,500 — Q2 2017 Acquisition - Belgium 319,100 319,100 90,800 7,500 74,700 — 82,200 60,100 48,100 190,400 4,300 Q2 2017 Belgium adjustments — — — (200 ) (1,100 ) — (1,300 ) (1,200 ) (800 ) (3,300 ) — Q2 2017 Panama adjustments(12) — — (160,900 ) — — (9,200 ) (9,200 ) — (151,700 ) (160,900 ) — Q2 2017 Jamaica adjustments(13) — — (20,600 ) — — — — (23,100 ) (21,100 ) (44,200 ) (3,900 ) Net Adjustments 326,100 326,100 (79,600 ) 11,200 79,100 (9,200 ) 81,100 43,100 (122,300 ) 1,900 400 Net Adds (Reductions) 686,600 725,300 (85,800 ) (77,000 ) 170,200 (21,900 ) 71,300 166,400 (58,200 ) 179,500 (27,700 )Footnotes for Operating Data and Subscriber Variance Tables
1 Homes Passed are homes, residential multiple dwelling units or commercial units that can be connected to our networks without materially extending the distribution plant, except for DTH homes. Certain of our Homes Passed counts are based on census data that can change based on either revisions to the data or from new census results. We do not count homes passed for DTH. Due to the fact that we do not own the partner networks (defined below) used in Switzerland (see note 10) we do not report homes passed for Switzerland’s partner networks. 2 Two-way Homes Passed are Homes Passed by those sections of our networks that are technologically capable of providing two-way services, including video, internet and telephony services. 3 Fixed-line Customer Relationships are the number of customers who receive at least one of our video, internet or telephony services that we count as Revenue Generating Units (“RGUs”), without regard to which or to how many services they subscribe. To the extent that RGU counts include equivalent billing unit (“EBU”) adjustments, we reflect corresponding adjustments to our Customer Relationship counts. For further information regarding our EBU calculation, see Additional General Notes to Tables. Customer Relationships generally are counted on a unique premises basis. Accordingly, if an individual receives our services in two premises (e.g., a primary home and a vacation home), that individual generally will count as two Customer Relationships. We exclude mobile-only customers from Customer Relationships. 4 RGU is separately a Basic Video Subscriber, Enhanced Video Subscriber, DTH Subscriber, Internet Subscriber or Telephony Subscriber (each as defined and described below). A home, residential multiple dwelling unit, or commercial unit may contain one or more RGUs. For example, if a residential customer in our Austrian market subscribed to our enhanced video service, fixed-line telephony service and broadband internet service, the customer would constitute three RGUs. Total RGUs is the sum of Basic Video, Enhanced Video, DTH, Internet and Telephony Subscribers. RGUs generally are counted on a unique premises basis such that a given premises does not count as more than one RGU for any given service. On the other hand, if an individual receives one of our services in two premises (e.g., a primary home and a vacation home), that individual will count as two RGUs for that service. Each bundled cable, internet or telephony service is counted as a separate RGU regardless of the nature of any bundling discount or promotion. Non-paying subscribers are counted as subscribers during their free promotional service period. Some of these subscribers may choose to disconnect after their free service period. Services offered without charge on a long-term basis (e.g., VIP subscribers 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 June 30, 2017 RGU counts exclude our separately reported postpaid and prepaid mobile subscribers. 5 Basic Video Subscriber is a home, residential multiple dwelling unit or commercial unit that receives our video service over our broadband network either via an analog video signal or via a digital video signal without subscribing to any recurring monthly service that requires the use of encryption-enabling technology. Encryption-enabling technology includes smart cards, or other integrated or virtual technologies that we use to provide our enhanced service offerings. With the exception of RGUs that we count on an EBU basis, we count RGUs on a unique premises basis. In other words, a subscriber with multiple outlets in one premises is counted as one RGU and a subscriber with two homes and a subscription to our video service at each home is counted as two RGUs. In Europe, we have approximately 179,600 “lifeline” customers that are counted on a per connection basis, representing the least expensive regulated tier of video cable service, with only a few channels. 6 Enhanced Video Subscriber is a home, residential multiple dwelling unit or commercial unit that receives our video service over our broadband network or through a partner network via a digital video signal while subscribing to any recurring monthly service that requires the use of encryption-enabling technology. Enhanced Video Subscribers that are not counted on an EBU basis are counted on a unique premises basis. For example, a subscriber with one or more set-top boxes that receives our video service in one premises is generally counted as just one subscriber. An Enhanced Video Subscriber is not counted as a Basic Video Subscriber. As we migrate customers from basic to enhanced video services, we report a decrease in our Basic Video Subscribers equal to the increase in our Enhanced Video Subscribers. Subscribers to enhanced video services provided by our operations in Switzerland over partner networks receive basic video services from the partner networks as opposed to our operations. 7 DTH Subscriber is a home, residential multiple dwelling unit or commercial unit that receives our video programming broadcast directly via a geosynchronous satellite. 8 Internet Subscriber is a home, residential multiple dwelling unit or commercial unit that receives internet services over our networks, or that we service through a partner network. Our Internet Subscribers exclude 42,100 digital subscriber line (“DSL”) subscribers within Austria that are not serviced over our networks. Our Internet Subscribers do not include customers that receive services from dial-up connections. In Switzerland, we offer a 2 Mbps internet service to our Basic and Enhanced Video Subscribers without an incremental recurring fee. Our Internet Subscribers in Switzerland include 88,200 subscribers who have requested and received this service. 9 Telephony Subscriber is a home, residential multiple dwelling unit or commercial unit that receives voice services over our networks, or that we service through a partner network. Telephony Subscribers exclude mobile telephony subscribers. Our Telephony Subscribers exclude 32,200 subscribers within Austria that are not serviced over our networks. In Switzerland, we offer a basic phone service to our Basic and Enhanced Video Subscribers without an incremental recurring fee. Our Telephony Subscribers in Switzerland include 112,400 subscribers who have requested and received this service. 10 Pursuant to service agreements, Switzerland offers enhanced video, broadband internet and telephony services over networks owned by third-party cable operators (“partner networks”). A partner network RGU is only recognized if there is a direct billing relationship with the customer. At June 30, 2017, Switzerland’s partner networks account for 132,400 Customer Relationships, 290,200 RGUs, 104,500 Enhanced Video Subscribers, 107,700 Internet Subscribers, and 78,000 Telephony Subscribers. 11 Our mobile subscriber count represents the number of active subscriber identification module (“SIM”) cards in service rather than services provided. For example, if a mobile subscriber has both a data and voice plan on a smartphone this would equate to one mobile subscriber. Alternatively, a subscriber who has a voice and data plan for a mobile handset and a data plan for a laptop (via a dongle) would be counted as two mobile subscribers. Customers who do not pay a recurring monthly fee are excluded from our mobile telephony subscriber counts after periods of inactivity ranging from 30 to 90 days, based on industry standards within the respective country. In a number of countries, our mobile subscribers receive mobile services pursuant to prepaid contracts. As of June 30, 2017, the prepaid mobile subscriber count included the following: Panama (1,599,200), Jamaica (914,900), Belgium (620,100), U.K. (575,500), Bahamas (255,600), Barbados (96,800), Chile (7,100) and twelve remaining CWC geographies (333,100). 12 During the quarter ended June 30, 2017, we discontinued counting customers of Panama's prepaid fixed-line voice service and certain inactive customers of Panama's DTH video service. 13 During the quarter ended June 30, 2017, we discontinued counting certain inactive customers of Jamaica's fixed line and mobile services.Additional General Notes to Tables:
Most of our broadband communications subsidiaries provide telephony, broadband internet, data, video or other B2B services. Certain of our B2B revenue is derived from small or home office (“SOHO”) subscribers that pay a premium price to receive enhanced service levels along with video, internet or telephony services that are the same or similar to the mass marketed products offered to our residential subscribers. All mass marketed products provided to SOHOs, whether or not accompanied by enhanced service levels and/or premium prices, are included in the respective RGU and customer counts of our broadband communications operations, with only those services provided at premium prices considered to be “SOHO RGUs” or “SOHO customers.” To the extent our existing customers upgrade from a residential product offering to a SOHO product offering, the number of SOHO RGUs or SOHO customers will increase, but there is no impact to our total RGU or customer counts. Due to system limitations, SOHO customers of CWC are not included in our respective RGU and customer counts as of June 30, 2017. With the exception of our B2B SOHO subscribers, we generally do not count customers of B2B services as customers or RGUs for external reporting purposes.
Certain of our residential and commercial RGUs are counted on an EBU basis, including residential multiple dwelling units and commercial establishments, such as bars, hotels, and hospitals, in Chile and Puerto Rico and certain commercial and residential multiple dwelling units in Europe (with the exception of Germany and Belgium, where we do not count any RGUs on an EBU basis). Our EBUs are generally calculated by dividing the bulk price charged to accounts in an area by the most prevalent price charged to non-bulk residential customers in that market for the comparable tier of service. As such, we may experience variances in our EBU counts solely as a result of changes in rates. In Germany, homes passed reflect the footprint and two-way homes passed reflect the technological capability of our network up to the street cabinet, with drops from the street cabinet to the building generally added, and in-home wiring generally upgraded, on an as needed or success-based basis. In Belgium, Telenet leases a portion of its network under a long-term capital lease arrangement. These tables include operating statistics for Telenet's owned and leased networks.
While we take appropriate steps to ensure that subscriber statistics are presented on a consistent and accurate basis at any given balance sheet date, the variability from country to country in (i) the nature and pricing of products and services, (ii) the distribution platform, (iii) billing systems, (iv) bad debt collection experience and (v) other factors add complexity to the subscriber counting process. We periodically review our subscriber counting policies and underlying systems to improve the accuracy and consistency of the data reported on a prospective basis. Accordingly, we may from time to time make appropriate adjustments to our subscriber statistics based on those reviews.
Subscriber information for acquired entities, including CWC, is preliminary and subject to adjustment until we have completed our review of such information and determined that it is presented in accordance with our policies.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170807006043/en/
Liberty Global plcInvestor Relations:Oskar Nooij, +1 303 220 4218orChristian Fangmann, +49 221 84 62 5151orJohn Rea, +1 303 220 4238orCorporate Communications:Matt Beake, +44 20 8483 6428orRebecca Pike, +44 20 8483 6216
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