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Liberty Global Reports Third Quarter 2019 Results

DENVER, Colorado--(BUSINESS WIRE)--

Accelerated our Gigabit broadband rollout to millions of European homes and businesses

Completed $2.7 billion tender offer for Class A & C shares in September

Q3 2019 operating income up 1.8% YoY to $208.8 million for continuing operations

Capital intensity continues to decrease substantially fueling YTD1 OFCF growth2 of 80%

Liberty Global (NASDAQ: LBTYA, LBTYB and LBTYK):

 

 

 

Continuing Operations (Including Switzerland)

Q3 2019

 

YTD 2019

 

 

Organic RGU Additions

(76,300

)

 

(80,400

)

 

 

Revenue Growth2

(0.6

)%

 

(0.7

)%

 

 

OCF Growth2

(4.1

)%

 

(3.0

)%

 

 

OFCF Growth2

34.8

%

 

42.1

%

 

 

 

 

 

 

 

 

Continuing Operations (Excluding Switzerland)3

Q3 2019

 

YTD 2019

 

 

Organic RGU Additions

(62,200

)

 

4,600

 

 

 

Revenue Growth2

(0.2

)%

 

(0.3

)%

 

 

OCF Growth2

(2.9

)%

 

(1.8

)%

 

 

OFCF Growth2

63.1

%

 

79.7

%

 

 

 

 

 

 

 

2019 Guidance Targets5

Excluding CH

 

Including CH

 

 

OCF Growth3

Flat to Down

 

Modest Decline

 

 

Adjusted FCF4

$550-$600 mm

 

$700-$750 mm

 

 

P&E Additions

~$2.7 bn

 

~$2.8-$2.9 bn

 

 

 

 

Liberty Global plc today announced its Q3 2019 financial results. Our former operations in Austria, Germany, Hungary, Romania and the Czech Republic, along with our DTH business (collectively, the "Discontinued Operations") have been accounted for as discontinued operations. Unless otherwise indicated, the information in this release relates only to our continuing operations.

CEO Mike Fries stated, "Over the past two years, we have undertaken a substantial reshaping of our distribution footprint, taking advantage of the fixed-mobile convergence wave across Europe with transactions that recognize the premium value of broadband networks. As a result of this rebalancing, we find ourselves in an enviable position from both operating and liquidity perspectives.

We have substantial scale in our remaining businesses, with 31 million consolidated fixed and mobile subscribers, generating approximately $5 billion of OCF per annum, and an additional 15 million fixed and mobile subscribers and $2 billion in annual OCF from our VodafoneZiggo joint venture in the Netherlands. In all markets we are leading the way with gigabit broadband speeds, converged fixed-mobile bundles, and a focus on profitable subscriber growth."

"Just as importantly, we are entering a new phase of operating and free cash flow expansion with capital intensity down 29%1 through nine months and operating free cash flow up 80%1. Not surprisingly we are confirming our OCF and FCF guidance for the full year.

One of the highlights of the quarter was the successful completion of our modified Dutch auction tender offers. We were able to purchase nearly 100 million shares in total at a blended average price of just over $27 per share, which represented around 14% of our shares outstanding, for a combined aggregate cost of $2.7 billion. Today we have $10 billion of liquidity 6 on the balance sheet and remain focused on long-term value creation.

While we are disappointed that Sunrise was unable to obtain approval for the financing of their acquisition of our Swiss operation3, we are excited with the progress we continue to make in that market. All of our key operating metrics - fixed subscriber movement, ARPU growth, NPS, mobile net adds - are moving in the right direction. Like the rest of Europe, Switzerland is rapidly converging around fixed-mobile services, and our gigabit broadband networks and superior TV platform are the fulcrum assets in that market.

Our third quarter 2019 earnings call is tomorrow morning at 9:00 a.m. E.T. and we hope you can join us."

About Liberty Global

Liberty Global (NASDAQ: LBTYA, LBTYB and LBTYK) is one of the world’s leading converged video, broadband and communications companies, with operations in six European countries under the consumer brands Virgin Media, Telenet and UPC. We invest in the infrastructure and digital platforms that empower our customers to make the most of the digital revolution. Our substantial scale and commitment to innovation enable us to develop market-leading products delivered through next-generation networks that connect 11 million customers subscribing to 25 million TV, broadband internet and telephony services. We also serve 6 million mobile subscribers and offer WiFi service through millions of 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, LionsGate, the Formula E racing series and several regional sports networks.

Q3 Highlights (on a continuing operations basis unless otherwise noted)

  • Q3 rebased revenue decreased 0.6% to $2,840.9 million
    • Q3 residential cable revenue7 decreased 1.3% YoY to $1,821.8 million
      • Results driven by revenue contractions in Switzerland and Belgium
    • Q3 residential mobile revenue7 increased 0.8% YoY to $401.0 million
      • Performance driven by strong Swiss result
    • Q3 B2B8 revenue7 decreased 0.7% YoY to $463.3 million
      • Strong growth in Switzerland and CEE offset by declines at our other operations
  • Q3 operating income increased 1.8% YoY to $208.8 million
  • Q3 rebased OCF declined by 4.1% to $1,211.7 million
  • Q3 property & equipment additions spend at 23.2% of revenue as compared to 30.3% in Q3 2018
  • Built 162,000 new premises during Q3, including 119,000 new premises in the U.K. & Ireland
  • Completed $2.7 billion tender offer in September
  • Solid balance sheet with $9.9 billion of liquidity6 at Q3
  • Net leverage9 of 3.6x at Q3
  • Fully-swapped borrowing cost of 4.1% on debt balance of $27.0 billion

 

Liberty Global (continuing operations)

 

Q3 2019

 

YoY Growth(i)

 

YTD 2019

 

YoY Growth(i)

 

 

 

 

 

 

 

 

 

Subscribers

 

 

 

 

 

 

 

 

Organic Net RGU Losses

 

(76,300

)

 

 

 

(80,400

)

 

 

Organic Net RGU Additions (Losses) excl. Switzerland

 

(62,200

)

 

 

 

4,600

 

 

 

 

 

 

 

 

 

 

 

 

Financial (in millions, except percentages)

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

Continuing operations

 

$

2,840.9

 

 

(0.6

%)

 

$

8,559.3

 

 

(0.7

%)

Continuing operations excluding Switzerland

 

 

 

(0.2

%)

 

 

 

(0.3

%)

Operating income

 

$

208.8

 

 

1.8

%

 

$

463.0

 

 

(21.1

%)

OCF:

 

 

 

 

 

 

 

 

Continuing operations

 

$

1,211.7

 

 

(4.1

%)

 

$

3,585.7

 

 

(3.0

%)

Continuing operations excluding Switzerland

 

 

 

(2.9

%)

 

 

 

(1.8

%)

OFCF:

 

 

 

 

 

 

 

 

Continuing operations

 

$

552.9

 

 

34.8

%

 

$

1,545.6

 

 

42.1

%

Continuing operations excluding Switzerland

 

 

 

63.1

%

 

 

 

79.7

%

 

 

 

 

 

 

 

 

 

Cash provided by operating activities

 

$

591.7

 

 

 

 

$

2,220.2

 

 

 

Cash provided by investing activities

 

$

10,492.0

 

 

 

 

$

9,809.3

 

 

 

Cash used by financing activities

 

$

(4,839.4

)

 

 

 

$

(6,434.8

)

 

 

Adjusted FCF4:

 

 

 

 

 

 

 

 

Continuing operations

 

$

(70.9

)

 

 

 

$

(143.4

)

 

 

Pro forma continuing operations(ii)

 

$

(16.2

)

 

 

 

$

(96.1

)

 

 

(i)

 

Revenue and OCF YoY growth rates are on a rebased basis

(ii)

 

Pro forma Adjusted FCF gives pro forma effect to certain adjustments to our recurring cash flows that we have or expect to realize following the disposition of the Discontinued Operations and the Switzerland Disposal Group. For additional details, see the information and reconciliation included within the Glossary

Subscriber Growth

 

 

Three months ended

 

Nine months ended

 

 

September 30,

 

September 30

 

 

2019

 

2018

 

2019

 

2018

 

 

 

Organic RGU net additions (losses) by product

 

 

 

 

 

 

 

 

Video

 

(65,700

)

 

(32,600

)

 

(181,100

)

 

(85,500

)

Data

 

10,800

 

 

23,900

 

 

62,800

 

 

73,300

 

Voice

 

(21,400

)

 

40,700

 

 

37,900

 

 

74,700

 

Total

 

(76,300

)

 

32,000

 

 

(80,400

)

 

62,500

 

 

 

 

 

 

 

 

 

 

Organic RGU net additions (losses) by market

 

 

 

 

 

 

 

 

U.K./Ireland

 

(52,700

)

 

105,300

 

 

1,600

 

 

262,400

 

Belgium

 

(36,000

)

 

(52,900

)

 

(91,700

)

 

(99,800

)

Switzerland

 

(14,100

)

 

(41,500

)

 

(85,000

)

 

(139,000

)

Continuing CEE (Poland and Slovakia)

 

26,500

 

 

21,100

 

 

94,700

 

 

38,900

 

Total

 

(76,300

)

 

32,000

 

 

(80,400

)

 

62,500

 

 

 

 

 

 

 

 

 

 

Organic Mobile SIM additions (losses) by product

 

 

 

 

 

 

 

 

Postpaid

 

167,400

 

 

60,800

 

 

365,500

 

 

254,900

 

Prepaid

 

(35,000

)

 

(37,100

)

 

(114,500

)

 

(122,900

)

Total

 

132,400

 

 

23,700

 

 

251,000

 

 

132,000

 

 

 

 

 

 

 

 

 

 

Organic Mobile SIM additions by market

 

 

 

 

 

 

 

 

U.K./Ireland

 

84,500

 

 

5,000

 

 

111,600

 

 

50,900

 

Belgium

 

30,600

 

 

10,500

 

 

95,000

 

 

58,800

 

Other

 

17,300

 

 

8,200

 

 

44,400

 

 

22,300

 

Total

 

132,400

 

 

23,700

 

 

251,000

 

 

132,000

 

  • Cable Product Performance: During Q3 we lost 76,000 RGUs, as compared to a gain of 32,000 RGUs in the prior-year period, as improved performances in our CEE operations, Switzerland and Telenet were more than offset by weakness at Virgin Media
  • U.K./Ireland: Q3 RGU losses were 53,000 were the result of our disciplined approach to customer acquisition and retention combined with our shift in focus to higher-value TV bundles. A 5,000 gain in broadband RGUs was offset by a 50,000 decline in video RGUs and a 9,000 decline in telephony RGUs
  • Belgium: RGU attrition of 36,000 in Q3 represents a year-over-year improvement as losses in the SFR footprint moderated
  • Switzerland: Switzerland lost 14,000 RGUs in Q3, which represents a strong year-over-year improvement as compared to a loss of 41,500 in Q3 2018, largely driven by an enhanced value proposition
  • Continuing CEE (Poland and Slovakia): Added 26,500 RGUs in Q3, as compared to 21,000 in Q3 2018, driven by improved performance in all products in Poland
  • Mobile: Added 132,000 mobile subscribers in Q3, as 167,000 postpaid additions were only partially offset by continued attrition in our low-ARPU prepaid base
    • Record Q3 U.K./Ireland postpaid mobile net adds of 107,000 were supported by the launch of our FMC bundles. Virgin Media's fixed-mobile converged base increased by 80 bps sequentially to 20.7% in Q3. Over time, take-up of converged bundles is expected to drive higher ARPU and lower churn
    • Belgium added 31,000 mobile subscribers during Q3 including 43,000 net postpaid additions. This growth was supported by our converged WIGO offering
    • Switzerland added 16,000 mobile subscribers in Q3 driven by bundling success and a revamped mobile offer following our MVNO switch in January 2019

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)

 

Nine months ended

 

Increase/(decrease)

 

 

September 30,

 

 

September 30,

 

Revenue

 

2019

 

2018

 

%

 

Rebased %

 

2019

 

2018

 

%

 

Rebased %

 

 

in millions, except % amounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.K./Ireland

 

$

1,579.9

 

 

$

1,667.7

 

 

(5.3

)

 

0.1

 

 

$

4,885.2

 

 

$

5,180.8

 

 

(5.7

)

 

0.1

 

Belgium

 

721.9

 

 

746.8

 

 

(3.3

)

 

(2.0

)

 

2,147.0

 

 

2,260.3

 

 

(5.0

)

 

(1.4

)

Switzerland

 

311.7

 

 

323.3

 

 

(3.6

)

 

(3.3

)

 

942.7

 

 

1,000.4

 

 

(5.8

)

 

(3.5

)

Continuing CEE

 

117.2

 

 

120.3

 

 

(2.6

)

 

2.4

 

 

355.4

 

 

373.1

 

 

(4.7

)

 

2.5

 

Central and Corporate

 

110.5

 

 

71.9

 

 

53.7

 

 

6.2

 

 

231.4

 

 

197.4

 

 

17.2

 

 

(3.8

)

Intersegment eliminations

 

(0.3

)

 

(0.3

)

 

N.M.

 

N.M.

 

(2.4

)

 

(3.2

)

 

N.M.

 

N.M.

Total continuing operations

 

$

2,840.9

 

 

$

2,929.7

 

 

(3.0

)

 

(0.6

)

 

$

8,559.3

 

 

$

9,008.8

 

 

(5.0

)

 

(0.7

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total continuing operations excluding Switzerland

 

 

 

 

 

 

 

(0.2

)

 

 

 

 

 

 

 

(0.3

)

______________________________

N.M. - Not Meaningful

  • Reported revenue for the three and nine months ended September 30, 2019 decreased 3.0% and 5.0% year over year, respectively
    • The Q3 result was primarily driven by the impact of (i) negative foreign exchange ("FX") movements, mainly related to the weakening of the British Pound and Euro against the U.S. dollar, and (ii) organic revenue contraction
  • Rebased revenue declined 0.6% and 0.7% in the Q3 and YTD periods, respectively. This result included:
    • For the YTD period, the favorable impact of $5.6 million related to revenue recognized by Virgin Media during the second quarter of 2019 in connection with the sale of rights to future commission payments on customer handset insurance arrangements
    • For the YTD period, the favorable impact of a $4.1 million revenue reversal recorded in Switzerland during the first quarter of 2018
    • The unfavorable impact of $3.8 million of mobile subscription revenue recognized in the U.K. during the third quarter of 2018 related to the expected recovery of certain prior-period VAT payments

Q3 2019 Rebased Revenue Growth - Segment Highlights

  • U.K./Ireland: Rebased revenue was broadly flat in Q3 driven by the net effect of (i) an increase in residential cable revenue due to modest increases in our cable RGU base and cable ARPU, offset by a decrease in cable non-subscription revenue, (ii) a decline in residential mobile revenue driven by lower subscription revenue which was impacted by the aforementioned recovery of prior-period VAT payments and (iii) a decline in B2B revenue due to lower data and installation revenue in our non-subscription business, which offset the benefit of dark fibre contract wins in the quarter and an increase in subscription revenue due to growth in SOHO RGUs
  • Belgium: Rebased revenue declined 2.0% in Q3 driven by the net effect of (i) lower B2B non-subscription revenue driven by a decrease in revenue from wholesale services and interconnect revenue, (ii) an increase in B2B subscription revenue due to growth in SOHO RGUs, (iii) a decline in residential cable revenue driven by a decrease in subscribers, partially offset by an increase in ARPU and (iv) an increase in mobile revenue due to higher revenue from the sale of mobile handsets and other devices, partially offset by lower mobile ARPU
  • Switzerland: Rebased revenue declined 3.3% in Q3, primarily due to the net effect of (i) a decrease in residential cable subscription revenue driven by subscriber volume losses and (ii) higher mobile revenue driven by both an increase in subscribers and handset sales
  • Continuing CEE (Poland and Slovakia): Rebased revenue increased 2.4% in Q3 driven by an increase in residential cable subscription revenue driven by new build areas
  • Central and Corporate: Rebased revenue increased 6.2% in Q3 primarily due to an increase in CPE sales to the VodafoneZiggo JV. Commencing in Q3, TSA revenue received from Vodafone has been rebased

Operating Income

  • Operating income was $208.8 million and $205.2 million in Q3 2019 and Q3 2018, respectively, representing an increase of 1.8% YoY. For the nine months ended September 30, 2019, our operating income of $463.0 million reflects a decrease of 21.1% as compared to $586.9 million for the 2018 period
  • The changes in operating income in the QTD and YTD periods primarily resulted from the net effect of (i) lower OCF, as further described below, (ii) decreases in depreciation and amortization expense, (iii) increases in share-based compensation expense and (iv) lower 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)

 

Nine months ended

 

Increase/(decrease)

 

 

September 30,

 

 

September 30,

 

OCF

 

2019

 

2018

 

%

 

Rebased %

 

2019

 

2018

 

%

 

Rebased %

 

 

in millions, except % amounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.K./Ireland

 

$

674.0

 

 

$

742.1

 

 

(9.2

)

 

(4.1

)

 

$

2,085.5

 

 

$

2,268.3

 

 

(8.1

)

 

(2.4

)

Belgium

 

358.6

 

 

383.4

 

 

(6.5

)

 

(2.3

)

 

1,047.0

 

 

1,124.7

 

 

(6.9

)

 

(1.4

)

Switzerland

 

168.0

 

 

191.0

 

 

(12.0

)

 

(11.9

)

 

500.8

 

 

566.5

 

 

(11.6

)

 

(9.4

)

Continuing CEE

 

58.2

 

 

60.9

 

 

(4.4

)

 

0.5

 

 

173.3

 

 

185.2

 

 

(6.4

)

 

0.6

 

Central and Corporate

 

(46.8

)

 

(88.7

)

 

47.2

 

 

15.6

 

 

(222.0

)

 

(283.3

)

 

21.6

 

 

1.5

 

Intersegment eliminations

 

(0.3

)

 

(4.0

)

 

N.M.

 

N.M.

 

1.1

 

 

(11.5

)

 

N.M.

 

N.M.

Total continuing operations

 

$

1,211.7

 

 

$

1,284.7

 

 

(5.7

)

 

(4.1

)

 

$

3,585.7

 

 

$

3,849.9

 

 

(6.9

)

 

(3.0

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total continuing operations excluding Switzerland

 

 

 

 

 

 

 

(2.9

)

 

 

 

 

 

 

 

(1.8

)

______________________________

N.M. - Not Meaningful

  • Reported OCF for the three and nine months ended September 30, 2019 decreased 5.7% and 6.9% year over year, respectively
    • The Q3 result was primarily driven by (i) the aforementioned negative impact of FX movements and (ii) organic OCF decline
  • Our rebased OCF decline of 4.1% and 3.0% in the Q3 and YTD periods, respectively, included:
    • The aforementioned favorable impacts of certain items on our revenue, as discussed in the "Revenue Highlights" section above
    • The following current year impacts:
      • Unfavorable network tax increases of $11.4 million and $29.6 million for Q3 and YTD, respectively, following an increase in the rateable value of our U.K. networks, which is being phased in over a six-year period ending in 2022
      • For the YTD period, higher severance costs in U.K./Ireland of $6.7 million associated with revisions to our operating model and decreases in senior management personnel recorded during the second quarter of 2019
      • For the YTD period, an unfavorable increase in personnel costs in Central and Corporate recorded during the second quarter of 2019 related to a $5.0 million cash bonus associated with the renewal of an existing executive employment contract on similar terms
    • The following prior year impacts:
      • For the YTD period, lower costs of $6.8 million due to the reassessment of an accrual in U.K./Ireland in the second quarter of 2018
      • For the YTD period, higher costs of $5.3 million resulting from the impact of a credit recorded during the second quarter of 2018 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
      • Higher costs of $5.2 million and $4.5 million for Q3 and YTD, respectively, due to the reassessment of certain accruals in U.K./Ireland in the third quarter of 2018

Q3 2019 Rebased Operating Cash Flow Growth - Segment Highlights

  • U.K./Ireland: Rebased OCF decline of 4.1% reflects the aforementioned revenue performance and increases in our cost base due to (i) higher programming costs, (ii) an $11.4 million net increase in network taxes, (iii) higher mobile data costs and (iv) the impact of a net $5.2 million benefit in the prior-year period relating to the reassessment of certain accruals
  • Belgium: Rebased OCF decline of 2.3% was largely driven by the Medialaan MVNO contract loss and certain regulatory headwinds
  • Switzerland: Rebased OCF decline of 11.9% in Q3 was largely due to (i) project and marketing spend related to growth initiatives and (ii) the aforementioned loss of residential cable subscription revenue
  • Continuing CEE (Poland and Slovakia): Rebased OCF increase of 0.5% as the aforementioned revenue growth was partially offset by increased marketing spend

OFCF Highlights

The following table presents (i) OFCF of each of our consolidated reportable segments for the comparative periods and (ii) the percentage change from period to period on a rebased basis:

 

 

Three months ended

 

 

 

Nine months ended

 

 

 

 

September 30,

 

 

September 30,

 

OFCF

 

2019

 

2018

 

Rebased %

 

2019

 

2018

 

Rebased %

 

 

in millions, except % amounts

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations:

 

 

 

 

 

 

 

 

 

 

 

 

U.K./Ireland

 

$

312.2

 

 

$

286.4

 

 

14.9

 

 

$

957.0

 

 

$

772.5

 

 

31.0

 

Belgium

 

240.1

 

 

174.0

 

 

44.0

 

 

649.2

 

 

560.1

 

 

23.0

 

Switzerland

 

96.7

 

 

131.3

 

 

(26.2

)

 

293.6

 

 

401.6

 

 

(24.9

)

Continuing CEE

 

33.4

 

 

29.7

 

 

17.7

 

 

107.1

 

 

86.1

 

 

32.8

 

Central and Corporate

 

(129.2

)

 

(220.6

)

 

29.0

 

 

(462.4

)

 

(693.2

)

 

26.2

 

Intersegment eliminations

 

(0.3

)

 

(4.0

)

 

N.M.

 

1.1

 

 

(11.5

)

 

N.M.

Total continuing operations

 

$

552.9

 

 

$

396.8

 

 

34.8

 

 

$

1,545.6

 

 

$

1,115.6

 

 

42.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total continuing operations excluding Switzerland

 

 

 

 

 

63.1

 

 

 

 

 

 

79.7

 

Net Earnings Attributable to Liberty Global Shareholders

  • Net earnings attributable to Liberty Global shareholders was $12,847.9 million and $974.1 million for the three months ended September 30, 2019 and 2018, respectively, and $12,907.9 million and $700.2 million for the nine months ended September 30, 2019 and 2018, respectively. These increases are primarily attributable to a $12.2 billion gain on the sale of our operations in Germany, Hungary, Romania and the Czech Republic recognized during the third quarter of 2019

Leverage and Liquidity

  • Total principal amount of debt and finance leases: $27.6 billion for continuing operations
  • Leverage ratios9: At September 30, 2019, our adjusted gross and net leverage ratios were 5.1x and 3.6x, respectively
  • Average debt tenor10: Approximately 7 years, with ~75% not due until 2025 or thereafter for continuing operations
  • Borrowing costs: Blended fully-swapped borrowing cost of our debt was 4.1% for continuing operations
  • Liquidity6: $9.9 billion for our continuing operations, including (i) $7.4 billion of cash at September 30, 2019 and (ii) aggregate unused borrowing capacity11 under our credit facilities of $2.5 billion

     

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 rebased OCF growth, our Adjusted FCF and our P&E additions; expectations with respect to Switzerland; decisions regarding the deployment of our capital; expectations with respect to the development, launch and benefits of our innovative and advanced products and services; 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, vendors and contractors 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/A and Forms 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 2019, we have adjusted our historical revenue, OCF and OFCF for the three and nine months ended September 30, 2018 to (i) include the pre-acquisition revenue, OCF and P&E additions of entities acquired during 2019 in our rebased amounts for the three and nine months ended September 30, 2018 to the same extent that the revenue, OCF and P&E additions of these entities are included in our results for the three and nine months ended September 30, 2019, (ii) include revenue and costs for the temporary elements of transitional and other services provided to the VodafoneZiggo JV, Vodafone, Deutsche Telekom (the buyer of UPC Austria), Liberty Latin America and M7 Group (the buyer of UPC DTH), to reflect amounts related to these services equal to those included in our results for the three and nine months ended September 30, 2019 and (iii) reflect the translation of our rebased amounts for the three and nine months ended September 30, 2018 at the applicable average foreign currency exchange rates that were used to translate our results for the three and nine months ended September 30, 2019. We have reflected the revenue, OCF and P&E additions of these acquired entities in our 2018 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, OCF and OFCF 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, OCF and OFCF that would have occurred if these transactions had occurred on the dates assumed for purposes of calculating our rebased amounts or the revenue, OCF and OFCF 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 2018 amounts to derive our rebased growth rates for our continuing operations:

 

Revenue

 

OCF

 

OFCF

 

Three months
ended
September 30,

2018

 

Nine months
ended
September 30,

2018

 

Three months
ended
September 30,

2018

 

Nine months
ended
September 30,

2018

 

Three months
ended
September 30,
2018

 

Nine months
ended
September 30,

2018

 

in millions

Acquisitions

$

24.7

 

 

$

56.2

 

 

$

1.8

 

 

$

5.5

 

 

$

28.9

 

 

$

28.3

 

Dispositions(i)

36.0

 

 

54.3

 

 

29.6

 

 

43.6

 

 

 

 

 

Foreign Currency

(133.7

)

 

(502.7

)

 

(53.2

)

 

(204.0

)

 

(17.1

)

 

(56.6

)

Total decrease

$

(73.0

)

 

$

(392.2

)

 

$

(21.8

)

 

$

(154.9

)

 

$

11.8

 

 

$

(28.3

)

(i)

 

Includes rebase adjustments related to agreements to provide transitional and other services to the VodafoneZiggo JV, Vodafone, Liberty Latin America, Deutsche Telekom and M7 Group. These adjustments result in an equal amount of fees in both the 2019 and 2018 periods for those services that are deemed to be temporary in nature. The net amount of these adjustments resulted in increases in revenue of $36.5 million and $54.8 million and OCF of $30.5 million and $45.9 million for the three and nine months ended September 30, 2018, respectively.

Summary of Debt, Finance 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, finance lease obligations and cash and cash equivalents at September 30, 2019:

 

 

 

 

Finance

 

Debt & Finance

 

Cash

 

 

 

 

Lease

 

Lease

 

and Cash

 

 

Debt(ii), (iii)

 

Obligations

 

Obligations

 

Equivalents

 

 

in millions

Liberty Global and unrestricted subsidiaries

 

$

1,511.3

 

 

$

54.6

 

 

$

1,565.9

 

 

$

7,144.3

 

Virgin Media(iv)

 

15,555.5

 

 

66.8

 

 

15,622.3

 

 

42.5

 

UPC Holding

 

4,156.8

 

 

21.8

 

 

4,178.6

 

 

105.4

 

Telenet

 

null