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Liberty Global Reports Second Quarter 2018 Results

DENVER, Colorado--(BUSINESS WIRE)--

Record Q2 Virgin Media rebased revenue growth and subscriber additions

Q2 continuing operations operating income up 31.0% year-over-year to $263.9 million

Q2 continuing operations rebased OCF growth of 3.3%, led by Belgium

Reconfirming all 2018 guidance

_____________________________________________________________________________

Q2 Revenue & YoY Growth4
$3.0bn | +2.7%

Q2 OCF & YoY Growth4
$1.3bn | +3.3%

Q2 Revenue & YoY Growth4
$4.0bn | +3.1%

Q2 OCF & YoY Growth4
$1.9bn | +3.7%

Liberty Global plc today announced its three months ("Q2") and six months ("YTD" or "H1") 2018 financial results. Our operations in Germany, Austria, Hungary, Romania and the Czech Republic (collectively, the "Discontinued European Operations") and the former LiLAC Group have been accounted for as discontinued operations. Unless otherwise indicated, the information in this release relates only to our continuing operations. As used in this release, the term "Full Company" includes our continuing operations and the Discontinued European Operations. For additional information, including the reasons that we present selected information on a Full Company basis, see note 1. In addition, on January 1, 2018, we adopted new revenue recognition rules on a prospective basis and a new presentation of certain components of our pension expense on a retrospective basis. All information in this release is presented on a comparable basis with respect to both of these accounting changes. For additional information concerning our discontinued operations and these accounting changes, see notes 2 and 3.

               
2018 Guidance5 Rebased

OCF Growth

P&E

Additions

New Build

& Upgrade

Adjusted Free
Cash Flow

Continuing Operations ~4% $4.0 BN $0.8 BN Not provided
Full Company ~5% $5.1 BN $1.2 BN $1.6 BN
 

CEO Mike Fries stated, "Our second quarter results were underpinned by continued momentum at Virgin Media, which generated record Q2 rebased4 revenue and subscriber growth, delivering a 4.1% top-line increase while adding 112,000 net RGU additions. Enhanced broadband speeds and the continued roll out of our V6 set top box helped deliver a substantial increase in our triple-play acquisitions, improved growth on our existing footprint and increased ARPU. Our other operations delivered mixed results, with Germany achieving a solid performance, offset by challenging competitive markets in Switzerland and Belgium.

"We recently announced several management changes that highlight our commitment to putting the best and brightest in critical positions. Enrique Rodriguez was named our Chief Technology Officer. Enrique brings a wealth of C-level experience to the table and we’re excited to tap his deep industry and technical knowledge. At Virgin Media, we announced the appointment of Lutz Schüler as Chief Operating Officer. Over the past eight years, Lutz has guided Unitymedia in Germany to unprecedented success, and we couldn't be happier to keep him in the Liberty family. Finally, we announced the appointments of Severina Pascu as CEO of UPC Switzerland and Eric Tveter as Chairman of our Swiss business and CEO of our operations in Eastern Europe.

Last week, we announced the closing of the sale of UPC Austria for over $2 billion or ~11x OCF, generating net proceeds of approximately $1.1 billion after taking into account the repayment of debt that we attribute to UPC Austria. These net proceeds will be used to increase our share repurchase program by $500 million and to repay additional debt across select credit pools of Liberty Global. With respect to the Vodafone deal announced back in May, we continue to target a mid-2019 closing.

At June 30, 2018, our continuing operations had an average debt tenor6 of more than seven years, a fully-swapped borrowing cost of 4.0% and a liquidity7 position in excess of $3 billion. During Q2 we significantly ramped our share repurchase activity and bought back nearly $800 million of stock."

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 and offer WiFi service through 12 million access points across our footprint.*

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, Casa Systems, LionsGate, the Formula E racing series and several regional sports networks.

* The figures included in this paragraph include both our continuing and discontinued operations, adjusted for our July 31, 2018 sale of UPC Austria

YTD and Q2 Highlights (on a continuing operations basis unless otherwise noted)

  • YTD and Q2 rebased revenue up 2.7% in each period
    • Q2 residential cable revenue8 of $2.0 billion decreased 1.8% year-over-year
    • Q2 residential mobile revenue8 increased 7.1% year-over-year to $0.4 billion
    • Q2 B2B9 revenue8 increased 8.0% year-over-year to $0.5 billion
  • YTD operating income decreased 6.7% year-over-year
    • Q2 operating income grew 31.0% year-over-year
  • YTD rebased OCF growth was 2.8% to $2.6 billion, including 3.3% growth in Q2
    • YTD results supported by strong performances in Belgium and Virgin Media
  • RGU additions of 17,000 in H1 2018, including 43,000 in Q2
  • Built over 150,000 new premises in Q2
    • Virgin Media delivered 118,00010 new premises in the U.K. & Ireland
  • Solid balance sheet with $3.5 billion of liquidity before considering the net proceeds received from our disposition of UPC Austria
  • Net leverage11 of 4.9x for the Full Company
  • Fully-swapped borrowing cost of 4.0%
  • Completed sale of UPC Austria to T-Mobile Austria in July
               

Liberty Global
(continuing operations unless otherwise noted)

Q2 2018

YoY
Growth(i)

YTD 2018

YoY
Growth/(Decline)
(i)

 

Subscribers

Organic RGU Net Additions12 42,900 14.4 % 17,400 (89.3 %)
 

Financial (in USD millions)

Revenue
Continuing operations $ 3,045.1 2.7 % $ 6,139.6 2.7 %
Full Company 3.1 % 3.6 %
OCF:
Continuing operations $ 1,309.8 3.3 % $ 2,581.6 2.8 %
Full Company 3.7 % 4.2 %
Operating income $ 263.9 31.0 % $ 384.3 (6.7 %)
 
Adjusted FCF:
Continuing operations $ (131.1 ) $ (1,127.9 )
Pro forma continuing operations(ii) $ (81.1 ) $ (991.8 )
Full Company $ 214.8 $ (410.3 )
Cash provided by operating activities $ 1,464.9 $ 2,142.9
Cash used by investing activities $ (389.1 ) $ (896.3 )
Cash used by financing activities $ (1,387.6 ) $ (3,037.5 )
(i)   Revenue and OCF YoY growth rates are on a rebased basis.
(ii) Pro forma Adjusted FCF gives pro forma effect to certain increases in our recurring cash flows that we expect to realize following the disposition of the Discontinued European Operations. For additional details, see the information and reconciliation included within the Glossary.
 

Subscriber Growth

    Three months ended     Six months ended
June 30, June 30,
2018     2017 2018     2017
 
Organic RGU net additions (losses) by product
Video (11,500 ) (16,200 ) (72,600 ) (26,200 )
Data 22,000 44,800 52,700 138,900
Voice 32,400   8,900   37,300   50,500  
Total 42,900   37,500   17,400   163,200  
 
Organic RGU net additions (losses) by market
U.K./Ireland 112,200 78,100 157,100 236,100
Belgium (8,400 ) (15,300 ) (29,900 ) (27,300 )
Switzerland (53,800 ) 6,100 (97,500 ) (2,800 )
Continuing CEE (Poland, Slovakia and DTH) (7,100 ) (31,400 ) (12,300 ) (42,800 )
Total 42,900   37,500   17,400   163,200  
 
Organic Mobile SIM additions (losses) by product
Postpaid 90,600 89,200 194,200 173,700
Prepaid (36,400 ) (92,900 ) (85,800 ) (165,900 )
Total 54,200   (3,700 ) 108,400   7,800  
 
Organic Mobile SIM additions (losses) by market
U.K./Ireland 20,700 (7,500 ) 45,900 (4,100 )
Belgium 26,100 (3,100 ) 48,400 400
Other 7,400   6,900   14,100   11,500  
Total 54,200   (3,700 ) 108,400   7,800  
 
  • Cable Product Performance: During Q2 we added 43,000 RGUs, a 14.4% improvement over the prior-year period, mainly driven by improved volumes in all regions except for Switzerland. On the fixed product side, data showed a year-over-year decrease, while video adds were largely in-line. Telephony net adds increased year-over-year
  • U.K./Ireland: Record Q2 RGU additions of 112,000 were higher than the prior year, with a larger contribution from both new build areas and our existing footprint. This was driven by our core offers in the U.K. focused on triple-play bundles, which included a doubling of broadband speeds combined with our cutting-edge V6 set-top box
  • Belgium: RGU attrition of 8,000 in Q2 was primarily due to continued intensified competition. Our converged quad-play package additions continued to grow, as we gained 18,000 new "WIGO" subscribers during Q2
  • Switzerland: Lost 54,000 RGUs in Q2, compared to a gain of 6,000 in Q2 2017, primarily due to heightened competition
  • Continuing CEE (Poland, Slovakia and DTH): Lost 7,000 RGUs in Q2, as compared to a loss of 31,000 in the prior-year period
  • Next-Generation Video Penetration (including Horizon TV, Horizon-Lite, TiVo, Virgin TV V6 and Yelo TV): Added 158,000 subscribers to our advanced platforms in Q2 and reached 6.7 million or 77% of our total cable video base (excluding DTH) by the end of the quarter
  • WiFi Connect Box: Deployments of our latest WiFi Connect box increased by over 360,000 in Q2, ending the quarter with an installed base of nearly 5.1 million or 55% of broadband subscribers across our continuing operations
  • Mobile: Added 54,000 mobile subscribers in Q2, as 91,000 postpaid additions were partially offset by continued attrition in our low-ARPU prepaid base
    • Belgium added 29,000 mobile subscribers during Q2, a strong year-over-year improvement, as the prior-year period was negatively impacted by the regulated prepaid registration process and its related churn
    • U.K./Ireland added 21,000 mobile subscribers in Q2 as postpaid growth was partially offset by low-ARPU prepaid losses. The penetration of 4G at Virgin Media increased to 68% of our postpaid base at the end of Q2 and 36% of our U.K. mobile base has been migrated to our full MVNO platform, which went live in Q4 2017
    • Switzerland mobile subscriber additions were in-line year-over-year with 8,000 mobile subscriber additions in Q2, driven by continued penetration of mobile in the fixed customer base

Revenue Highlights

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 both a reported and rebased basis:

    Three months ended     Increase/(decrease)     Six months ended     Increase/(decrease)
June 30, June 30,
Revenue

2018

   

2017(3)

%

   

Rebased %

2018

   

2017(3)

%     Rebased %
in millions, except % amounts
 
Continuing operations:
U.K./Ireland $ 1,734.9 $ 1,563.8 10.9 4.1 $ 3,513.1 $ 3,066.3 14.6 4.7
Belgium 753.9 684.8 10.1 (1.0 ) 1,513.5 1,344.8 12.5 (1.1 )
Switzerland 332.2 338.7 (1.9 ) (1.9 ) 677.1 669.0 1.2 (1.6 )
Continuing CEE 152.9 141.8 7.8 0.3 313.4 276.3 13.4 0.7
Central and Corporate 72.0 42.7 68.6 59.3 123.8 83.5 48.3 31.8
Intersegment eliminations (0.8 ) (0.9 )   N.M. N.M. (1.3 ) (4.0 )   N.M. N.M.
Total continuing operations $ 3,045.1   $ 2,770.9   9.9   2.7   $ 6,139.6   $ 5,435.9   12.9   2.7  
 
Discontinued European Operations(i):
Germany 4.5   7.3  
Austria 4.4   3.5  
Discontinued CEE 4.1   5.7  
 
Full Company 3.1   3.6  

N.M. - Not Meaningful

(i) For information concerning our discontinued operations, see note 2.

  • Reported revenue for the three and six months ended June 30, 2018, increased 9.9% and 12.9% year-over-year, respectively
    • These results were primarily driven by the impact of (i) positive foreign exchange ("FX") movements, mainly related to the strengthening of the British Pound and Euro against the U.S. dollar, and (ii) organic revenue growth
  • Rebased revenue grew 2.7% in each of the Q2 and H1 2018 periods. The result in the YTD period included:
    • A $5.6 million headwind from the expected recovery of VAT paid in prior periods with respect to copyright fees in Belgium, which benefited revenue in H1 2017
    • A $6.4 million headwind from the release of unclaimed customer credits in Switzerland in H1 2017
    • The unfavorable $3.9 million impact due to the reversal during the first quarter of 2018 of revenue in Switzerland that was recognized during prior-year periods
  • Our residential cable business reported a rebased revenue decline of 1.8% in Q2 and grew 0.4% in H1 2018
  • Our B2B business (including SOHO and non-subscription revenue) reported rebased revenue growth of 8.0% in Q2 and 7.9% in H1 2018
  • Our residential mobile business (including interconnect and handset sales) posted 7.1% rebased revenue growth in Q2 and 6.9% in H1 2018

Q2 2018 Rebased Revenue Growth - Segment Highlights

  • U.K./Ireland: Rebased revenue growth of 4.1% in Q2 reflects (i) 2.5% growth in our residential cable business supported by subscriber growth and accelerating cable ARPU, (ii) 16.1% rebased growth in residential mobile revenue (including interconnect and mobile handset revenue), reflecting higher revenue from mobile handset sales that was partially offset by lower mobile subscription revenue, and (iii) 2.7% rebased revenue growth in our B2B business, driven by continued growth in the SOHO segment
  • Belgium: Rebased revenue decline of 1.0% in Q2 was mainly driven by the net effect of (i) growth in B2B revenue, (ii) lower residential cable revenue and (iii) lower mobile revenue
  • Switzerland: Rebased revenue declined 1.9% in Q2, primarily due to the net effect of (i) lower residential cable subscription revenue, which was driven primarily by competitive pressures, (ii) an increase in B2B revenue, (iii) higher mobile revenue and (iv) higher revenue from the distribution of MySports channels
  • Continuing CEE (Poland, Slovakia and DTH): Rebased revenue growth of 0.3% in Q2 due to the net effect of (i) growth in our B2B business and (ii) lower residential cable revenue
  • Central and Corporate: Rebased revenue increased 59.3% in Q2 due largely to the low-margin sale of customer premises equipment to the VodafoneZiggo JV, which began in the second quarter of 2018

Operating Income

  • Operating income of $263.9 million and $201.3 million in Q2 2018 and Q2 2017, respectively, representing an increase of 31.0% year-over-year. For the six months ended June 30, 2018, our operating income of $384.3 million million reflects a decrease of 6.7% as compared to $412.0 million in H1 2017
  • The increase in operating income in the QTD period primarily resulted from higher OCF, as further described below, partially offset by increases in depreciation and amortization. The decrease in operating income in the YTD period primarily resulted from higher OCF that was more than offset by increases in depreciation and amortization and impairment, restructuring and other operating items, net

Operating Cash Flow Highlights

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 both a reported and rebased basis:

    Three months ended     Increase/(decrease)     Six months ended     Increase/(decrease)
June 30, June 30,
OCF 2018    

2017(3)

%     Rebased % 2018    

2017(3)

%     Rebased %
in millions, except % amounts
 
Continuing operations:
U.K./Ireland $ 763.6 $ 701.0 8.9

2.4

$ 1,526.2 $ 1,343.9 13.6

3.9

Belgium 383.7 316.7 21.2 9.0 741.3 613.2 20.9 5.8
Switzerland 189.0 212.4 (11.0 ) (11.0 ) 375.5 416.1 (9.8 ) (12.3 )
Continuing CEE 67.9 64.8 4.8 (2.5 ) 139.8 123.1 13.6 0.8
Central and Corporate (83.6 ) (98.7 ) 15.3 21.9 (182.7 ) (191.7 ) 4.7 13.0
Intersegment eliminations (10.8 ) (8.4 )   N.M. N.M. (18.5 ) (16.2 )   N.M. N.M.
Total continuing operations $ 1,309.8   $ 1,187.8   10.3   3.3   $ 2,581.6   $ 2,288.4   12.8   2.8  
 
OCF margin - continuing operations 43.0 % 42.9 % 42.0 % 42.1 %
 
Discontinued European Operations(i):
Germany 4.3   8.0  
Austria 3.5   2.9  
Discontinued CEE 9.1   8.9  
 
Full Company 3.7   4.2  

N.M. - Not Meaningful

(i) For information concerning our discontinued operations, see note 2.

  • Reported OCF for the three and six months ended June 30, 2018, increased 10.3% and 12.8% year-over-year, respectively
    • This result was primarily driven by (i) the aforementioned positive impact of FX movements and (ii) organic OCF growth
  • Rebased OCF growth of 3.3% in Q2 and 2.8% in H1 2018 included:
    • The net unfavorable impact on our revenue of certain items, as discussed in the "Revenue Highlights" section above
    • Higher costs of $23.8 million in U.K./Ireland during both 2018 periods resulting from the net impact of credits recorded during the second quarter of 2017 ($28.8 million) and the second quarter of 2018 ($5.0 million) in connection with a telecommunications operator's agreement to compensate Virgin Media and other communications providers for certain prior-period contractual breaches related to network charges
    • Unfavorable network tax increases of $4.6 million and $13.0 million, respectively, following an April 1, 2017 increase in the rateable value of our existing U.K. networks, which is being phased in over a five-year period to 2021
    • Favorable impacts of $12.7 million and $19.4 million, respectively, due to the expected settlement of a portion of our 2018 annual incentive compensation with Liberty Global ordinary shares through a shareholding incentive program that was implemented in 2018
    • An unfavorable $6.4 million increase in costs during the 2018 periods due to the reassessment of an accrual in the U.K.
  • As compared to the prior-year period, our Q2 and H1 2018 OCF margins were up 10 and down 10 basis points, respectively, to 43.0% and 42.0%

Q2 2018 Rebased Operating Cash Flow Growth - Segment Highlights

  • U.K./Ireland: Rebased OCF growth of 2.4% was negatively impacted by the aforementioned increase in U.K. costs relating to compensation for prior period contractual breaches related to network charges, the reassessment of an accrual and higher network taxes. Aside from these items, rebased OCF growth resulted from the net effect of (i) increased revenue, (ii) higher handset costs and (iii) lower marketing costs
  • Belgium: Rebased OCF growth of 9.0%, largely driven by the net effect of (i) lower direct costs as a result of the migration of subscribers to our own mobile network and (ii) the aforementioned revenue decrease
  • Switzerland: Rebased OCF decline of 11.0% in Q2, due to the aforementioned revenue decline, an increase in interconnect costs and an increase in expenses associated with the MySports Platform that was launched in Q3 2017
  • Continuing CEE (Poland, Slovakia and DTH): Rebased OCF declined 2.5%, driven by the net effect of (i) the aforementioned revenue trend and (ii) the accrual of $2.6 million of additional costs during the second quarter of 2018 following the reassessment of an operational contingency

Net Earnings (Loss) Attributable to Liberty Global Shareholders

  • Net earnings was $912.6 million for the three months ended June 30, 2018, as compared to a net loss of $683.2 million for the prior-year period. On a YTD basis, our net loss was $273.9 million and $1,009.7 million during the 2018 and 2017 periods, respectively

Leverage and Liquidity

  • Total capital leases and principal amount of third-party debt: $31.8 billion for continuing operations
  • Leverage ratios11: At June 30, 2018, our adjusted gross and net leverage ratios for the Full Company were 5.0x and 4.9x, respectively.
  • Average debt tenor : Over 7 years, with ~72% not due until 2024 or thereafter for continuing operations
  • Borrowing costs: Blended fully-swapped borrowing cost of our third-party debt was 4.0% for continuing operations
  • Liquidity: $3.5 billion, including (i) $0.9 billion of cash at June 30, 2018 and (ii) aggregate unused borrowing capacity13 under our credit facilities of $2.6 billion, for our continuing operations

Forward-Looking Statements and Disclaimer

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements with respect to our strategies, future growth prospects and opportunities; expectations with respect to our OCF growth, our Adjusted FCF, our new build and upgrade and our P&E additions, each on a continuing operations and full company basis; expectations with respect to the development, enhancement and deployment of our innovative and advanced products and services; the anticipated closing of the Vodafone transaction; expectations with respect to the use of proceeds from the sale of UPC Austria; expectations regarding our share buyback program; the expected settlement of a portion of our 2018 annual incentive compensation with Liberty Global ordinary shares; the strength of our balance sheet and tenor of our third-party debt; and other information and statements that are not historical fact. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. These risks and uncertainties include events that are outside of our control, such as the continued use by subscribers and potential subscribers of our and our affiliates’ 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 Forms 10-K and 10-Q. These forward-looking statements speak only as of the date of this release. We expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Balance Sheets, Statements of Operations and Statements of Cash Flows

The condensed consolidated balance sheets, statements of operations and statements of cash flows of Liberty Global are in our 10-Q.

Rebase Information

For purposes of calculating rebased growth rates on a comparable basis for all businesses that we owned during 2018, we have adjusted our historical revenue and OCF for the three and six months ended June 30, 2017 to (i) include the pre-acquisition revenue and OCF of entities acquired during 2018 and 2017 in our rebased amounts for the three and six months ended June 30, 2017 to the same extent that the revenue and OCF of these entities are included in our results for the three and six months ended June 30, 2018, (ii) include revenue and certain operating and SG&A expenses associated with the framework services agreement with the VodafoneZiggo JV to reflect amounts equal to the framework services agreement amounts included in our results for the three and six months ended June 30, 2018, (iii) exclude the revenue and OCF of entities disposed of during 2017, (iv) include revenue for the temporary elements of the Split-off Agreements with Liberty Latin America as if the Split-off Agreements had been in place at the beginning of 2017, (v) reflect the January 1, 2018 adoption of the new revenue recognition standard (ASU 2014-09, Revenue from Contracts with Customers) as if such adoption had occurred on January 1, 2017 and (vi) reflect the translation of our rebased amounts for the three and six months ended June 30, 2017 at the applicable average foreign currency exchange rates that were used to translate our results for the three and six months ended June 30, 2018. We have reflected the revenue and OCF of these acquired entities in our 2017 rebased amounts based on what we believe to be the most reliable information that is currently available to us (generally pre-acquisition financial statements), as adjusted for the estimated effects of (a) any significant differences between U.S. GAAP and local generally accepted accounting principles, (b) any significant effects of acquisition accounting adjustments, (c) any significant differences between our accounting policies and those of the acquired entities and (d) other items we deem appropriate. We do not adjust pre-acquisition periods to eliminate nonrecurring items or to give retroactive effect to any changes in estimates that might be implemented during post-acquisition periods. As we did not own or operate the acquired businesses during the pre-acquisition periods, no assurance can be given that we have identified all adjustments necessary to present the revenue 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 2017 amounts to derive our rebased growth rates:

    Revenue     OCF

Three months ended
June 30,

   

Six months ended
June 30,

Three months ended
June 30,

   

Six months ended
June 30,

2017 2017 2017 2017
in millions
Continuing operations:
Acquisitions $ 23.6 $ 40.9 $ 9.8 $ 19.5
Revenue Recognition (ASU 2014-09) (4.0 ) (8.8 ) (7.6 ) (13.4 )
Dispositions(i) (6.4 ) (15.0 ) (2.6 ) (7.1 )
Foreign Currency 175.6   516.2   72.4   211.7  
Total increase $ 188.8   $ 533.3   $ 72.0   $ 210.7  
 
Discontinued European Operations:
Revenue Recognition (ASU 2014-09) $ (4.9 ) $ (9.9 ) $ (3.2 ) $ (5.1 )
Foreign Currency 74.3   206.6   43.7   119.2  
Total increase $ 69.4   $ 196.7   $ 40.5   $ 114.1  
 
Full Company:
Acquisitions $ 23.6 $ 40.9 $ 9.8 $ 19.5
Revenue Recognition (ASU 2014-09) (8.9 ) (18.7 ) (10.8 ) (18.5 )
Dispositions(i) (6.4 ) (15.0 ) (2.6 ) (7.1 )
Foreign Currency 249.9   722.8   116.1   330.9  
Total increase $ 258.2   $ 730.0   $ 112.5   $ 324.8  

(i)

  Includes rebase adjustments related to agreements to provide transitional and other services to the VodafoneZiggo JV and Liberty Latin America. These adjustments result in an equal amount of fees in both the 2018 and 2017 periods for those services that are deemed to be temporary in nature. The net amount of these adjustments resulted in decreases in both revenue and OCF of $0.8 million for the three months ended June 30, 2017 and decreases in revenue and OCF of $1.7 million and $1.5 million, respectively, for the six months ended June 30, 2017.
 

Summary of Debt, Capital Lease Obligations & Cash and Cash Equivalents

The following table(i) details the U.S. dollar equivalent balances of the outstanding principal amount of our continuing operations debt, capital lease obligations and cash and cash equivalents at June 30, 2018:

        Capital     Debt & Capital     Cash
Lease Lease and Cash
Debt(ii), (iii) Obligations Obligations Equivalents
in millions
Liberty Global and unrestricted subsidiaries $ 2,170.9 $ 57.1 $ 2,228.0 $ 670.6
Virgin Media(iv) 16,824.8 73.5 16,898.3 38.2
UPC Holding 6,980.1 80.6 7,060.7 5.9
Telenet 5,320.5   461.6   5,782.1   147.7
Total $ 31,296.3   $ 672.8   $ 31,969.1   $ 862.4

______________________________

(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 or are expected to be repaid with portions of the proceeds from the disposition of UPC Austria and the Vodafone Disposal Group.
(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.
 

Property and Equipment Additions and Capital Expenditures

The tables below highlight the categories of the property and equipment additions for the indicated periods and reconcile those additions to the capital expenditures that are presented in the condensed consolidated statements of cash flows in our 10-Q.

    Three months ended June 30,
2018     2017     2018     2017     2018     2017

Continuing
operations

Discontinued
European Operations

Full Company
in millions, except % amounts
Customer premises equipment $ 242.3 $ 218.0 $ 58.0 $ 86.2 $ 300.3 $ 304.2
New Build & Upgrade 190.4 233.4 73.9 72.1 264.3 305.5
Capacity 84.9 139.8 33.7 23.2 118.6 163.0
Baseline 190.7 153.0 48.1 47.9 238.8 200.9
Product & Enablers 156.6   209.0   31.1   21.2   187.7   230.2
Total P&E Additions 864.9 953.2 $ 244.8   $ 250.6   $ 1,109.7   $ 1,203.8
Reconciliation of P&E Additions to capital expenditures:
Assets acquired under capital-related vendor financing arrangements(i) (551.6 ) (605.0 )
Assets acquired under capital leases (22.6 ) (71.3 )
Changes in current liabilities related to capital expenditures 21.1   (19.3 )
Total capital expenditures, net(ii) $ 311.8   $ 257.6  
 
Capital expenditures, net:
Third-party payments $ 343.7 $ 358.5
Proceeds received for transfers to related parties(iii) (31.9 ) (100.9 )
Total capital expenditures, net $ 311.8   $ 257.6  
 
P&E Additions as % of revenue3 28.4 % 34.4 %
 
    Six months ended June 30,
2018     2017     2018     2017     2018     2017

Continuing
operations

Discontinued
European Operations

Full Company
in millions, except % amounts
Customer premises equipment $ 539.9 $ 440.9 $ 136.7 $ 159.3 $ 676.6 $ 600.2
New Build & Upgrade 378.4 364.6 148.8 130.7 527.2 495.3
Capacity 211.4 239.6 60.1 40.0 271.5 279.6
Product & Enablers 364.4 318.4 59.2 37.5 423.6 355.9
Baseline 356.3   268.2   105.5   89.0   461.8   357.2
Total P&E Additions 1,850.4 1,631.7 $ 510.3   $ 456.5   $ 2,360.7   $ 2,088.2
Reconciliation of P&E Additions to capital expenditures:
Assets acquired under capital-related vendor financing arrangements(i) (1,187.9 ) (1,164.1 )
Assets acquired under capital leases (46.5 ) (97.9 )
Changes in current liabilities related to capital expenditures 181.8   218.3  
Total capital expenditures, net(ii) $ 797.8   $ 588.0  
 
Capital expenditures, net:
Third-party payments $ 855.1 $ 782.9
Proceeds received for transfers to related parties(iii) (57.3 ) (194.9 )
Total capital expenditures, net $ 797.8   $ 588.0  
 
P&E Additions as % of revenue3 30.1 % 30.0 %

______________________________

(i)   Amounts exclude related VAT of $88 million and $94 million during the three months ended June 30, 2018 and 2017, respectively, and $186 million and $184 million during the six months ended June 30, 2018 and 2017, respectively, that were also financed by our vendors under these arrangements.
(ii) The capital expenditures that we report in our 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.
(iii) Primarily relates to transfers of centrally-procured property and equipment to our discontinued operations and the VodafoneZiggo JV.
 

ARPU per Cable Customer Relationship

The following table provides ARPU per cable customer relationship for the indicated periods:

    Three months ended June 30,     %     Rebased
2018    

2017(3)

Change % Change
 
Liberty Global $ 58.73 $ 54.58 7.6 % 1.0 %
U.K. & Ireland (Virgin Media) £ 51.11 £ 50.29 1.6 % 1.6 %
Belgium (Telenet) 55.15 55.04 0.2 % 0.6 %
UPC 30.83 33.39 (7.7 %) (2.4 %)
 

Mobile ARPU

The following tables provide ARPU per mobile subscriber for the indicated periods:

    ARPU per Mobile Subscriber
Three months ended June 30,     %     Rebased
2018    

2017(3)

Change % Change
Liberty Global:
Including interconnect revenue $ 18.88 $ 19.15 (1.4 %) (3.5 %)
Excluding interconnect revenue $ 15.08 $ 15.36 (1.8 %) (4.5 %)
 

Footnotes for Consolidated Operating Data and Subscriber Variance Tables

(i)   We have approximately 197,000 “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) Our Internet Subscribers exclude 36,200 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 79,400 subscribers who have requested and received this service.
(iii) Our Telephony Subscribers exclude 28,300 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 141,200 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 June 30, 2018, our mobile subscriber count included 501,000 and 442,700 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 June 30, 2018, Switzerland’s partner networks account for 129,000 Cable Customer Relationships, 301,100 RGUs, which include 108,200 Enhanced Video Subscribers, 110,100 Internet Subscribers, and 82,800 Telephony Subscribers. Subscribers to enhanced video services provided by 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.
 

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 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. 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.

In Germany, homes passed reflect the footprint and two-way homes passed reflect the technological capability of our network up to the street cabinet, with drops from the street cabinet to the building generally added, and in-home wiring generally upgraded, on an as needed or success-based basis. In Belgium, Telenet leases a portion of its network under a long-term capital lease arrangement. These tables include operating statistics for Telenet's owned and leased networks.

While we take appropriate steps to ensure that subscriber statistics are presented on a consistent and accurate basis at any given balance sheet date, the variability from country to country in (i) the nature and pricing of products and services, (ii) the distribution platform, (iii) billing systems, (iv) bad debt collection experience and (v) other factors add complexity to the subscriber counting process. We periodically review our subscriber counting policies and underlying systems to improve the accuracy and consistency of the data reported on a prospective basis. Accordingly, we may from time to time make appropriate adjustments to our subscriber statistics based on those reviews.

Subscriber information for acquired entities is preliminary and subject to adjustment until we have completed our review of such information and determined that it is presented in accordance with our policies.

...
   
Consolidated Operating Data — June 30, 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. 14,229,900 14,218,100 5,473,200 3,888,400 3,888,400 5,166,500 4,486,100 13,541,000 3,034,400
Belgium 3,333,300 3,333,300 2,159,200 220,200 1,783,000 2,003,200 1,679,400 1,295,500 4,978,100 2,724,900
Switzerland(v) 2,302,500 2,302,500 1,168,500 469,200 665,300 1,134,500 725,100 530,400 2,390,000 129,400
Ireland 903,500 869,800 435,100 10,700 260,100 270,800 371,100 352,500 994,400 64,200
Poland 3,408,400 3,351,900 1,430,200 180,600 1,029,300 1,209,900 1,147,800 636,800 2,994,500 3,500
Slovakia 609,200 594,400 192,800 26,700 140,200 166,900 133,300 81,100 381,300
DTH     778,300       778,300   778,300   10,900   10,900   800,100  
Total continuing operations 24,786,800   24,670,000   11,637,300   907,400   7,766,300   778,300   9,452,000   9,234,100   7,393,300   26,079,400   5,956,400
 
 
Discontinued European Operations: