Market Overview

Liberty Global Reports First Quarter 2019 Results

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Vodafone and Sunrise transactions remain on track to close during the
summer of 2019 and Q4 2019, respectively

Recently closed the sale of our DTH business in CEE for €180 million

Q1 2019 continuing operations operating income down 10% to $106
million

Confirming all 2019 guidance targets

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

Continuing Operations (Including Switzerland)

       

Q1 2019

Net Adds 25,000
Revenue Growth1 (0.6)%
OCF Growth1 (0.5)%
Cash Flows From:
Operating Activities $306 mm
Investing Activities $(368) mm
Financing Activities $(738) mm
OFCF Growth1 74%
Adjusted FCF $(625) mm
P&E Additions $699 mm
 
Continuing Operations (Excluding Switzerland)2 Q1 2019
Net Adds 68,000
Revenue Growth1 (0.2)%
OCF Growth1 0.8%
OFCF Growth1 162%
Adjusted FCF3 $(622) mm
P&E Additions $640 mm
 
2019 Guidance Targets4 (Excluding
Switzerland)
2
OCF Growth1 Flat to Down
Adjusted FCF3 $550 mm to $600 mm
P&E Additions ~$2.7 bn

Liberty Global plc today announced its Q1 2019 financial results. Our
operations in Germany, Hungary, Romania and the Czech Republic, along
with our DTH business and our former operation in Austria (collectively,
the "Discontinued Operations") have been accounted for as discontinued
operations. UPC Switzerland will continue to be included in our
continuing operations until the pending sale transaction is approved by
Sunrise's shareholders. Unless otherwise indicated, the information in
this release relates only to our continuing operations.

CEO Mike Fries stated, "A year ago we announced the sale of our
operations in Germany, Hungary, Romania and the Czech Republic to
Vodafone, which represents the largest divestiture in company history.
Since deal announcement we have crossed a number of key milestones and
the European Commission is currently in the final stages of its review.
We are confident that we remain on track for a successful completion of
this transaction during the summer. With respect to the sale of UPC
Switzerland to Sunrise, the Swiss Competition Authority is now reviewing
the case having received formal notification and we anticipate
regulatory approval in the fourth quarter. And finally, we are pleased
to announce that the sale of our Eastern European DTH business was
completed in early May. We will provide updates in due course regarding
our capital allocation decisions with the total proceeds from these
transactions.

"From an operating perspective, Virgin Media continued to deliver
improved subscriber trends. During the first quarter, Virgin Media
delivered nearly 60,000 RGU additions, a 32% year-over-year improvement
driven by 26,000 new customer relationships. On the innovation front, we
are pushing the envelope in the U.K. In April, we rolled out compelling
new fixed-mobile converged bundles, boosted our top broadband speed to
500 Mbps and launched Intelligent WiFi, a cloud-based adaptive
system that's designed to significantly improve our customers' in-home
WiFi experience.

"Our Q1 ARPU performance at Virgin Media was impacted by lower install
and telephony usage revenue, the timing of certain PPV events and
increased promotions in response to market dynamics. However, our
competitive position remains strong and we continue to extend our reach
with Project Lightning, where we are building 400,000-500,000 new
premises every year.

"In Switzerland, we are seeing emerging green shoots from our
multi-faceted turnaround plan. Our Horizon 4 set-top box rollout is in
full-swing with 130,000 boxes installed to date. Customer reception has
been very strong with NPS scores materially higher than our legacy
product. We also revamped our fixed-line bundles and boosted our top
broadband speed to 600 Mbps. On the mobile front, we are beginning to
harvest the benefits from our recent MVNO switch as we added 13,000
subscribers in the quarter, which represents our best Q1 ever.

"As forecasted, we continue to see substantial declines in capital
intensity with Q1 property and equipment additions lowered by
approximately 30% year-over-year. As a result, our operating free cash
flow performance nearly doubled from the prior-year period.

"We will be hosting an earnings call tomorrow morning at 9:00 a.m. EDT
to discuss our first quarter results. We hope you can join us."

About Liberty Global

Liberty Global (NASDAQ:LBTYA, LBTYB and LBTYK)) is the world's largest
international TV and broadband company, with operations in 10 European
countries under the consumer brands Virgin Media, Unitymedia, Telenet
and UPC. We invest in the infrastructure and digital platforms that
empower our customers to make the most of the video, internet and
communications revolution. Our substantial scale and commitment to
innovation enable us to develop market-leading products delivered
through next-generation networks that connect 21 million customers
subscribing to 45 million TV, broadband internet and telephony services.
We also serve 6 million mobile subscribers.*

In addition, Liberty Global owns 50% of VodafoneZiggo, a joint venture
in the Netherlands with 4 million customers subscribing to 10 million
fixed-line and 5 million mobile services, as well as significant
investments in ITV, All3Media, ITI Neovision, LionsGate, the Formula E
racing series and several regional sports networks.

* The figures included in this paragraph include both the continuing
and discontinued operations that we owned on March 31, 2019

Q1 Highlights (on a continuing operations
basis unless otherwise noted)

  • Q1 rebased revenue decreased 0.6%
    • Q1 residential cable revenue5 decreased 1.1%
      year-over-year to $1.9 billion
      • Results driven by revenue contractions in Switzerland and
        Belgium
    • Q1 residential mobile revenue5 decreased 2.4%
      year-over-year to $0.4 billion
      • Strong Swiss results offset by weakness in all other operations
    • Q1 B2B6 revenue5 increased 3.2%
      year-over-year to $0.5 billion
      • Q1 growth in all markets led by performance in Belgium and
        U.K./Ireland
  • Q1 operating income decreased 10.3% year-over-year to $105.5 million
  • Q1 rebased OCF declined by 0.5% to $1,183.3 million
    • Strong results at Telenet were more than offset by softness at UPC
      Switzerland and Virgin Media
  • Q1 property & equipment additions spend down approximately 30%
    year-over-year
  • Built 131,000 new premises in Q1
    • Virgin Media delivered 102,000 new premises in the U.K. & Ireland
  • Completed the sale of our DTH business for €180 million ($202 million)
    in early May
  • Repurchased over $200 million of stock in Q1 2019
  • Solid balance sheet with $3.4 billion of liquidity7
  • Net leverage8 of 5.3x for the Full Company
  • Fully-swapped borrowing cost of 4.3%

Liberty Global (continuing operations)

       

Q1 2019

   

YoY
Growth
(i)

 

Subscribers

Organic RGU Net Additions 24,700
Organic RGU Net Additions excluding Switzerland 67,600
 

Financial (in USD millions)

Revenue
Continuing operations $ 2,868.0 (0.6 %)
Continuing operations excluding Switzerland (0.2 %)
Operating income $ 105.5 (10.3 %)
OCF:
Continuing operations $ 1,183.3 (0.5 %)
Continuing operations excluding Switzerland 0.8 %
 
Cash provided by operating activities $ 306.3
Cash used by investing activities $ (367.7 )
Cash used by financing activities $ (737.5 )
Adjusted FCF:
Continuing operations $ (624.5 )
Pro forma continuing operations(ii) $ (622.1 )

(i)

  Revenue and OCF YoY growth rates are on a rebased basis

(ii)

Pro forma Adjusted FCF gives pro forma effect to certain adjustments
to our recurring cash flows that we have or expect to realize
following the disposition of the remaining Discontinued Operations
and the Switzerland Disposal Group2. For additional
details, see the information and reconciliation included within the
Glossary
 
 

Subscriber Growth

 
    Three months ended
March 31,
2019     2018
 
Organic RGU net additions (losses) by product
Video (60,500 ) (45,200 )
Data 42,400 30,500
Voice 42,800   4,400  
Total 24,700   (10,300 )
 
Organic RGU net additions (losses) by market
U.K./Ireland 59,200 44,900
Belgium (35,700 ) (25,200 )
Switzerland (42,900 ) (43,700 )
Continuing CEE (Poland and Slovakia) 44,100   13,700  
Total 24,700   (10,300 )
 
Organic Mobile SIM additions (losses) by product
Postpaid 72,300 113,100
Prepaid (45,500 ) (49,400 )
Total 26,800   63,700  
 
Organic Mobile SIM additions (losses) by market
U.K./Ireland (6,700 ) 25,200
Belgium9 20,900 31,800
Other 12,600   6,700  
Total 26,800   63,700  
 
  • Cable Product Performance: During Q1 we
    added 25,000 RGUs, as compared to a loss of 10,000 RGUs in the
    prior-year period, as an improved performance in our CEE operations,
    at Virgin Media and in Switzerland was partially offset by weakness in
    Belgium. From a product perspective, voice and data adds showed a
    year-over-year increase, while video losses accelerated year-over-year
  • U.K./Ireland: Q1 RGU additions of 59,000
    represents a 32% increase over the prior-year period, driven by
    success in our Project Lightning footprint
  • Belgium: RGU attrition of 36,000 in Q1
    was primarily due to intensified competition
  • Switzerland: Lost 43,000 RGUs in Q1,
    compared to a loss of 44,000 in Q1 2018, primarily due to continued
    intense competition
  • Continuing CEE (Poland and Slovakia):
    Gained 44,000 RGUs in Q1, as compared to 14,000 added in the
    prior-year period, driven by stronger broadband, voice and video adds
    in Poland
  • Mobile: Added 27,000 mobile subscribers
    in Q1, as 72,000 postpaid additions were only partially offset by
    continued attrition in our low-ARPU prepaid base
    • Q1 U.K./Ireland postpaid mobile net additions of 26,000 were
      offset by low-ARPU prepaid losses, resulting in a net loss of
      7,000 mobile subscriptions; 4G subscriptions now represent 81% of
      our postpaid base
    • Belgium added 21,000 mobile subscribers during Q1
    • Switzerland added 13,000 mobile subscribers in Q1, driven by
      bundling success and a revamped mobile offer following our MVNO
      switch to Swisscom's network

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

   

March 31,

Increase/(decrease)

Revenue 2019     2018

%

    Rebased %
in millions, except % amounts
 
Continuing operations:
U.K./Ireland $ 1,661.3 $ 1,778.2 (6.6 ) (0.1 )
Belgium 711.9 759.6 (6.3 ) (0.6 )
Switzerland 316.0 344.9 (8.4 ) (3.7 )
Continuing CEE 119.1 129.5 (8.0 ) 2.2
Central and Corporate 60.7 52.7 15.2 (1.1 )
Intersegment eliminations (1.0 ) (1.4 ) N.M.   N.M.  
Total continuing operations $ 2,868.0   $ 3,063.5   (6.4 ) (0.6 )
 
Total continuing operations excluding Switzerland (0.2 )
 
Discontinued Operations(i):
Germany $ 699.2 $ 782.8 (10.7 ) (3.3 )
Austria 109.7 (100.0 )
Discontinued CEE 188.4 201.3 (6.4 ) 2.9
Intersegment eliminations (1.2 ) (1.2 ) N.M.   N.M.  
Total Discontinued Operations $ 886.4   $ 1,092.6   (18.9 ) (2.1 )
______________________________
N.M. - Not Meaningful
(i)   For information concerning our discontinued operations, see note 2.
 
  • Reported revenue for the three months ended March 31, 2019 decreased
    6.4% year-over-year
    • The Q1 results were primarily driven by the impact of (i) negative
      foreign exchange ("FX") movements, mainly related to the weakening
      of the British Pound and Euro against the U.S. dollar, and (ii)
      organic revenue contraction
  • Rebased revenue declined 0.6% during Q1. This result included the
    favorable impact of a $4.1 million revenue reversal recorded during
    the first quarter of 2018

Q1 2019 Rebased Revenue Growth - Segment Highlights

  • U.K./Ireland: Rebased revenue decrease of
    0.1% in Q1 driven by the net effect of (i) a decrease in residential
    mobile revenue driven by lower volume of handset sales offsetting the
    revenue benefit of an increase in mobile subscribers in Ireland, (ii)
    an increase in residential cable revenue due to higher subscription
    revenue driven by increased subscriber growth and (iii) higher B2B
    revenue due to an increase in internet SOHO subscribers
  • Belgium: Rebased revenue decline of 0.6%
    in Q1 driven by the net effect of (i) an increase in B2B revenue due
    to an increase in SOHO subscribers, (ii) a decrease in residential
    cable revenue due to decreases in cable non-subscription revenue from
    lower sales of equipment and cable sub revenue due to lower
    subscribers and (iii) a decrease in residential mobile revenue due to
    a decrease in mobile ARPU
  • Switzerland: Rebased revenue declined
    3.7% in Q1, primarily due to the net effect of (i) a decrease in lower
    residential cable subscription revenue, which was primarily driven by
    lower average subscriber levels, (ii) an increase in mobile revenue
    and (iii) higher B2B revenue
  • Continuing CEE (Poland and Slovakia):
    Rebased revenue increased 2.2% in Q1 driven by (i) growth in our B2B
    business and (ii) an increase in residential cable subscription
    revenue driven by new build areas
  • Central and Corporate: Rebased revenue
    decreased 1.1% in Q1 due largely to lower-margin sales of customer
    premises equipment to the VodafoneZiggo JV, which began in the second
    quarter of 2018

Operating Income

  • Operating income was $105.5 million and $117.6 million in Q1 2019 and
    Q1 2018, respectively, representing a decrease of 10.3% year-over-year.
  • The decrease in operating income resulted from the net effect of (i) a
    decrease in depreciation and amortization expense, (ii) lower OCF, as
    further described below, (iii) an increase in share-based compensation
    expense and (iv) an increase in impairment, restructuring and other
    operating items, net.

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

   

March 31,

Increase/(decrease)

OCF 2019     2018

%

    Rebased %
in millions, except % amounts
 
Continuing operations:
U.K./Ireland $ 708.3 $ 762.6 (7.1 ) (0.7 )
Belgium 339.0 357.6 (5.2 ) 2.2
Switzerland 163.1 186.5 (12.5 ) (7.4 )
Continuing CEE 57.2 62.3 (8.2 ) 2.0
Central and Corporate (85.7 ) (107.1 ) 20.0 4.2
Intersegment eliminations 1.4   (0.2 ) N.M.   N.M.  
Total continuing operations $ 1,183.3   $ 1,261.7   (6.2 ) (0.5 )
 
Total continuing operations excluding Switzerland 0.8  
 
Discontinued Operations(i):
Germany $ 438.5 $ 492.1 (10.9 ) (3.5 )
Austria 58.8 (100.0 )
Discontinued CEE 70.8 76.8 (7.8 ) 1.3
Intersegment eliminations 7.6   9.5   N.M.   N.M.  
Total Discontinued Operations $ 516.9   $ 637.2   (18.9 ) (2.6 )
______________________________
N.M. - Not Meaningful

(i)

  For information concerning our discontinued operations, see note 2.
 
  • Reported OCF for the three months ended March 31, 2019 decreased 6.2%
    year-over-year
    • This result was primarily driven by the aforementioned revenue
      decline
  • Rebased OCF decline of 0.5% in Q1 included:
    • Unfavorable network tax increase of $5.5 million following an
      increase in the rateable value of our existing U.K. networks,
      which is being phased in over a six-year period ending in 2022
    • The aforementioned favorable impact of a revenue reversal recorded
      in Switzerland during the first quarter of 2018
  • As compared to the prior-year period, our Q1 2019 OCF margin was up 10
    basis points to 41.3%

Q1 2019 Rebased Operating Cash Flow Growth -
Segment Highlights

  • U.K./Ireland: Rebased OCF contraction of
    0.7% was primarily attributable to the aforementioned revenue
    performance, increased programming costs and higher network taxes
  • Belgium: Rebased OCF growth of 2.2%,
    largely driven by lower direct costs as a result of the migration of
    subscribers to our own mobile network
  • Switzerland: Rebased OCF decline of 7.4%
    in Q1, largely due to the aforementioned loss of residential cable
    subscription revenue
  • Continuing CEE (Poland and Slovakia):
    Rebased OCF growth of 2.0% largely driven by the aforementioned
    revenue trend

Net Earnings (Loss) Attributable to Liberty Global Shareholders

  • Net earnings (loss) attributable to Liberty Global shareholders was
    $7.0 million and ($1,186.5 million) for the three months ended March
    31, 2019 and 2018, respectively.

Leverage and Liquidity

  • Total principal amount of debt and finance leases:
    $30.2 billion for continuing operations
  • Leverage ratios8: At March 31,
    2019, our adjusted gross and net leverage ratios for the Full Company
    were 5.4x and 5.3x, respectively.
  • Average debt tenor10:
    Approximately 7 years, with ~71% not due until 2025 or thereafter for
    continuing operations
  • Borrowing costs: Blended fully-swapped
    borrowing cost of our debt was 4.3% for continuing operations
  • Liquidity7: $3.4 billion for
    our continuing operations, including (i) $0.9 billion of cash at
    March 31, 2019 and (ii) aggregate unused borrowing capacity11
    under our credit facilities of $2.5 billion

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; the anticipated
regulatory approvals, closings and impacts of each of the Vodafone and
Sunrise transactions; the expected use of proceeds of our disposal
transactions; decisions regarding our capital allocation; expectation
with respect to Project Lightning; 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 Form 10-Q. Further, estimated cash
proceeds from pending dispositions are inherently uncertain and
represent management's expectations and beliefs and do not take into
account the ultimate use of the proceeds or any other changes in our
capital structure or tax effects, directly or indirectly related to the
pending dispositions. 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 and OCF for the three months ended March 31, 2018 to
(i) include the pre-acquisition revenue and OCF of entities acquired
during 2018 in our rebased amounts for the three months ended March 31,
2018 to the same extent that the revenue and OCF of these entities are
included in our results for the three months ended March 31, 2019, (ii)
exclude the revenue and OCF of UPC Austria to the same extent that the
revenue and OCF of UPC Austria is excluded from our results for the
three months ended March 31, 2019, and to exclude the revenue and OCF of
entities disposed of during 2018, (iii) include revenue and costs for
the temporary elements of transitional and other services provided to
the VodafoneZiggo JV, Deutsche Telekom (the buyer of UPC Austria) and
Liberty Latin America, to reflect amounts related to these services
equal to those included in our results for the three months ended March
31, 2019 and (iv) reflect the translation of our rebased amounts for the
three months ended March 31, 2018 at the applicable average foreign
currency exchange rates that were used to translate our results for the
three months ended March, 2019. We have reflected the revenue and OCF 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 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 2018 amounts to
derive our rebased growth rates:

        Three months ended March 31, 2018
Revenue     OCF
in millions
Continuing operations:
Acquisitions $ 16.3 $ 1.6
Dispositions(i) 12.6 9.8
Foreign Currency (208.5 ) (83.9 )
Total decrease $ (179.6 ) $ (72.5 )
 
Discontinued Operations:
Dispositions (101.3 ) (54.3 )
Foreign Currency (86.3 ) (51.9 )
Total decrease $ (187.6 ) $ (106.2 )

(i)

  Includes rebase adjustments related to agreements to provide
transitional and other services to the VodafoneZiggo JV, Liberty
Latin America and UPC Austria. These adjustments result in an equal
amount of fees in both the 2019 and 2018 periods for those services
that are deemed to be temporary in nature. The net amount of these
adjustments resulted in increases in revenue and OCF of $12.6
million and $11.2 million, respectively, for the three months ended
March 31, 2018.
 

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 March 31, 2019:

        Finance     Debt & Finance     Cash
Lease Lease and Cash
Debt(ii), (iii) Obligations Obligations Equivalents
in millions
Liberty Global and unrestricted subsidiaries $ 1,605.8 $ 45.2 $ 1,651.0 $ 824.5
Virgin Media(iv) 16,000.2 68.5 16,068.7 35.7
UPC Holding 5,970.6 53.9 6,024.5 26.3
Telenet 5,957.6   463.9   6,421.5   52.9
Total $ 29,534.2   $ 631.5   $ 30,165.7   $ 939.4
______________________________
(i)   Except as otherwise indicated, the amounts reported in the
table include the named entity and its subsidiaries.
(ii) Debt amounts for UPC Holding and Telenet include notes issued
by special purpose entities that are consolidated by the respective
subsidiary.
(iii) Debt amounts for UPC Holding include those amounts that are not
a direct obligation of the entities to be disposed within the UPC
Holding borrowing group. Certain of these obligations have been
repaid with portions of the proceeds from the disposition of UPC
Austria.
(iv) The Virgin Media borrowing group includes certain subsidiaries
of Virgin Media, but excludes the parent entity, Virgin Media Inc.
The cash and cash equivalents amount includes cash and cash
equivalents held by the Virgin Media borrowing group, but excludes
cash and cash equivalents held by Virgin Media Inc. This amount is
included in the amount shown for Liberty Global and unrestricted
subsidiaries.
 

Property and Equipment Additions and Capital Expenditures

The table below highlights 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 March 31,
2019     2018     2019     2018
Continuing operations Discontinued Operations
in millions, except % amounts
Customer premises equipment $ 228.6 $ 295.7 $ 124.0 $ 80.7
New Build & Upgrade 142.4 188.0 29.3 74.9
Capacity 72.6 126.5 25.7 26.3
Product & Enablers 126.6 207.8 14.8 28.6
Baseline 128.4   165.6   33.6   57.3
Total P&E Additions 698.6 983.6 $ 227.4   $ 267.8
Reconciliation of P&E Additions to capital expenditures:
Assets acquired under capital-related vendor financing arrangements(i) (508.9 ) (635.9 )
Assets acquired under finance leases (12.2 ) (23.9 )
Changes in current liabilities related to capital expenditures 153.8   160.4  
Total capital expenditures, net(ii) $ 331.3   $ 484.2  
 
Capital expenditures, net:
Third-party payments $ 371.6 $ 509.6
Proceeds received for transfers to related parties(iii) (40.3 ) (25.4 )
Total capital expenditures, net $ 331.3   $ 484.2  
 
P&E Additions as % of revenue 24.4 % 32.1 %
______________________________
(i)   Amounts exclude related VAT of $84.8 million and $96.6 million
during the three months ended March 31, 2019 and 2018, respectively,
that were also financed by our vendors under these arrangements.
(ii) The capital expenditures that we report in our condensed
consolidated statements of cash flows do not include amounts that
are financed under vendor financing or finance lease arrangements.
Instead, these expenditures are reflected as non-cash additions to
our property and equipment when the underlying assets are delivered,
and as repayments of debt when the related principal is repaid.
(iii) Primarily relates to transfers of centrally-procured property
and equipment to our Discontinued Operations and the VodafoneZiggo
JV.
 

ARPU per Cable Customer Relationship

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

    Three months ended March 31,    

%

    Rebased
2019     2018 Change % Change
 
Liberty Global $ 60.20 $ 63.97 (5.9 %) 0.9 %
U.K. & Ireland (Virgin Media) £ 51.36 £ 51.58 (0.4 %) (0.3 %)
Belgium (Telenet) 57.27 54.90 4.3 % 4.4 %
UPC 37.01 36.81 0.5 % (0.5 %)
 

Mobile ARPU

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

    ARPU per Mobile Subscriber
Three months ended March 31,     %     Rebased
2019     2018 Change % Change
Liberty Global:  
Including interconnect revenue $ 16.27 $ 15.51 4.9 % (1.2 %)
Excluding interconnect revenue $ 13.97 $ 12.83 8.9 % (1.6 %)
 
    Consolidated Operating Data — March 31, 2019
      Video        

Homes
Passed

Two-way
Homes
Passed

Cable
Customer
Relationships

Basic
Video
Subscribers(i)

 

Enhanced
Video
Subscribers

 

DTH
Subscribers

 

Total
Video

Internet
Subscribers(ii)

Telephony
Subscribers(iii)

Total
RGUs

Total
Mobile
Subscribers(iv)

                 
 
Continuing operations:
U.K. 14,510,700 14,504,000 5,534,200 3,846,700 3,846,700 5,259,600 4,617,300 13,723,600 3,030,600
Belgium 3,357,100 3,357,100 2,099,800 191,400 1,725,400 1,916,800 1,658,100 1,243,200 4,818,100 2,704,800
Switzerland(v) 2,344,400 2,344,400 1,092,200 427,600 632,600 1,060,200 686,200 513,600 2,260,000 159,100
Ireland 929,800 897,600 437,700 2,900 269,200 272,100 378,100 352,300 1,002,500 86,100
Poland 3,479,400 3,425,000 1,462,800 177,900 1,053,800 1,231,700 1,192,300 668,000 3,092,000 2,800
Slovakia 615,100     600,300     194,700     27,300     144,000         171,300     138,500     86,100     395,900  
Total continuing operations 25,236,500     25,128,400     10,821,400     827,100     7,671,700         8,498,800     9,312,800     7,480,500     25,292,100   5,983,400
 
 
Discontinued Operations:
Germany 13,152,000 13,075,700 7,179,100 4,692,900 1,574,700 6,267,600 3,638,300 3,396,700 13,302,600 273,300
Romania 3,162,700 3,126,800 961,700 205,900 708,400 914,300 594,200 581,100 2,089,600
Hungary 1,833,600 1,816,100 865,500 62,900 628,300 691,200 700,400 686,400 2,078,000 115,800
Czech Republic 1,550,900 1,531,100 613,600 172,500 366,500 539,000 506,100 202,700 1,247,800
DTH         756,800             756,800     756,800     11,400     11,400     779,600  
Total Discontinued Operations 19,699,200     19,549,700     10,376,700     5,134,200     3,277,900     756,800     9,168,900     5,450,400     4,878,300     19,497,600   389,100
 
    Subscriber Variance Table - March 31, 2019 vs. December 31, 2018
      Video        

Homes
Passed

Two-way
Homes
Passed

Cable
Customer
Relationships

Basic
Video
Subscribers(i)

 

Enhanced
Video
Subscribers

 

DTH
Subscribers

 

Total
Video

Internet
Subscribers(ii)

Telephony
Subscribers(iii)

Total
RGUs

Total
Mobile
Subscribers(iv)

                 
 
Continuing operations:
U.K. 93,400 93,700 24,800 (25,300 ) (25,300 ) 35,000 46,100 55,800 (8,900 )
Belgium 6,400 6,400 (15,200 ) (9,800 ) (13,300 ) (23,100 ) 300 (12,900 ) (35,700 ) 20,900
Switzerland(v) 6,200 6,200 (23,600 ) (9,600 ) (13,200 ) (22,800 ) (14,100 ) (6,000 ) (42,900 ) 12,800
Ireland 6,800 7,100 500 (1,600 ) 2,600 1,000 2,400 3,400 4,600
Poland 15,600 16,100 15,000 (2,600 ) 11,100 8,500 17,100 13,700 39,300 (400 )
Slovakia 1,200     1,200     600     (400 )   1,700         1,300     1,700     1,700     4,700    
Total continuing operations 129,600     130,700     2,100     (24,000 )   (36,400 )       (60,400 )   42,400     42,600     24,600   29,000  
 
 
Discontinued Operations:
Germany 15,800 15,500 3,200 17,400 (32,800 ) (15,400 ) 22,800 15,900 23,300 (10,000 )
Romania 8,900 8,800 (4,200 ) (16,100 ) 9,800 (6,300 ) 1,800 7,800 3,300
Hungary 5,600 5,500 2,600 (5,400 ) 4,700 (700 ) 6,000 9,300 14,600 5,900
Czech Republic 1,800 1,800 (2,800 ) 2,200 (2,700 ) (500 ) 8,700 8,200
DTH         (24,000 )           (24,000 )   (24,000 )   200     200     (23,600 )  
Total Discontinued Operations 32,100     31,600     (25,200 )   (1,900 )   (21,000 )   (24,000 )   (46,900 )   30,800     41,900     25,800   (4,100 )
 
    Subscriber Variance Table - March 31, 2019 vs. December 31, 2018
      Video        

Homes
Passed

Two-way
Homes
Passed

Cable
Customer
Relationships

Basic
Video
Subscribers(i)

 

Enhanced
Video
Subscribers

 

Total
Video

Internet
Subscribers(ii)

Telephony
Subscribers(iii)

Total
RGUs

Total
Mobile
Subscribers(iv)

               
 

Organic Change Summary:

U.K. 93,400 93,700 25,000 (25,300 ) (25,300 ) 35,000 46,100 55,800 (11,300 )
Belgium 6,400 6,400 (15,200 ) (9,800 ) (13,300 ) (23,100 ) 300 (12,900 ) (35,700 ) 20,900
Other Europe 29,800     30,600     (11,500 )   (14,100 )   2,000     (12,100 )   7,100     9,600     4,600   17,200  
Total Organic Change 129,600     130,700     (1,700 )   (23,900 )   (36,600 )   (60,500 )   42,400     42,800     24,700   26,800  
 

Q1 2019 Adjustments:

Q1 2019 Adjustment - U.K. (200 ) 2,400
Q1 2019 Adjustment - Poland         4,000     (100 )   200     100         (200 )   (100 ) (200 )
Net Adds (Reductions)         3,800     (100 )   200     100         (200 )   (100 ) 2,200  

Footnotes for Consolidated Operating Data and Subscriber
Variance Tables

 
(i)   We have approximately 197,400 "lifeline" customers that are counted
on a per connection basis, representing the least expensive
regulated tier of video cable service, with only a few channels.
(ii) In Switzerland, we offer a 2 Mbps internet service to our Basic and
Enhanced Video Subscribers without an incremental recurring fee. Our
Internet Subscribers in Switzerland include 74,400 subscribers who
have requested and received this service.
(iii) In Switzerland, we offer a basic phone service to our Basic and
Enhanced Video Subscribers without an incremental recurring fee. Our
Telephony Subscribers in Switzerland include 157,500 subscribers who
have requested and received this service.
(iv) In a number of countries, our mobile subscribers receive mobile
services pursuant to prepaid contracts. As of March 31, 2019, our
mobile subscriber count included 476,700 and 343,800 prepaid mobile
subscribers in Belgium and the U.K., respectively.
(v) Pursuant to service agreements, Switzerland offers enhanced video,
broadband internet and telephony services over networks owned by
third-party cable operators ("partner networks"). A partner network
RGU is only recognized if there is a direct billing relationship
with the customer. At March 31, 2019, Switzerland's partner networks
account for 124,100 Cable Customer Relationships, 296,400 RGUs,
which include 105,600 Enhanced Video Subscribers, 108,200 Internet
Subscribers, and 82,600 Telephony Subscribers. Subscribers to our
enhanced video services provided over partner networks receive basic
video services from the partner networks as opposed to our
operations. Due to the fact that we do not own these partner
networks, we do not report homes passed for Switzerland's partner
networks.
 

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 finance lease arrangement. These tables include
operating statistics for Telenet's owned and leased networks.

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

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

Footnotes

1   With the exception of OFCF, the indicated growth rates are rebased
for acquisitions, dispositions, FX and other items that impact the
comparability of our year-over-year results. Please see Rebase
Information for information on rebased growth. OFCF growth rates are
presented on a reported basis.
2 The term "excluding Switzerland" represents our continuing
operations excluding UPC Switzerland and certain holding companies
within the UPC Holding borrowing group (together, the "Switzerland
Disposal Group"), including the UPC Holding borrowing group's
existing senior and senior secured notes (the "UPC Notes"),
associated derivatives and certain other debt items. This is the
basis on which analyst consensus estimates for our key performance
indicators are currently derived and on which we originally provided
our 2019 guidance for OCF, Adjusted FCF and Property and Equipment
Additions. For the 2019 period, our Discontinued Operations include
Germany, Hungary, Romania, the Czech Republic and our DTH business.
For the 2018 period, our Discontinued Operations also include our
former operations in Austria through July 31, 2018.
3 Pro forma Adjusted FCF incorporates our preliminary estimate of (a)
assumed interest and related derivative payments that were made by
the UPC Holding continuing operations during the period and (b) the
net cash flows that we would have received from transitional
services agreements if the sale of the remaining Discontinued
Operations and UPC Switzerland had occurred on January 1, 2019. A
reconciliation of our Adjusted FCF guidance for 2019 to a U.S. GAAP
measure is not provided as not all elements of the reconciliation
are projected as part of our forecasting process, as certain items
may vary significantly from one period to another.
4 Absolute full-year 2019 U.S. dollar guidance figures based on FX
rates of EUR/USD 1.13 and GBP/USD 1.30
5 Includes subscription and non-subscription revenue. For additional
information regarding how we define our revenue categories, see note
17 to the condensed consolidated financial statements included in
our 10-Q.
6 Total B2B includes subscription (SOHO) and non-subscription revenue.
B2B and SOHO growth rates include upsell from our residential
businesses.
7 Liquidity refers to cash and cash equivalents plus the maximum
undrawn commitments under subsidiary borrowing facilities, without
regard to covenant compliance calculations.

Consistent with how we calculate our leverage ratios under our debt
agreements, we calculate our debt ratios on a Full Company basis,
which includes our continuing operations and our remaining
Discontinued Operations, with the gross and net debt ratios defined
as total debt and net debt, respectively, divided by annualized OCF
of the latest quarter. Net debt is defined as total debt less cash
and cash equivalents. For purposes of these calculations, debt is
measured using swapped foreign currency rates, consistent with the
covenant calculation requirements of our subsidiary debt agreements,
and excludes the loans backed or secured by the shares we hold in
ITV plc and Lions Gate Entertainment Corp. We have not presented
leverage ratios on a continuing operations basis as we believe that
such a presentation would overstate our leverage and would not be
representative of the actual leverage ratios that we will report
once all dispositions are completed. For additional information, see
note 4 to the condensed consolidated financial statements included
in our 10-Q. The following table details the calculation of our Full
Company consolidated debt and net debt to annualized consolidated
OCF ratios as of and for the quarter ended March 31, 2019:
       

As of and for the
quarter ended
March
31, 2019

in millions, except ratios
 
Consolidated Debt to Annualized Consolidated OCF:
Debt and finance lease obligations before deferred financing costs,
discounts and premiums
$ 40,023.6
Principal related projected derivative cash payments (1,508.1 )
ITV Collar Loan (1,406.4 )
Lionsgate Collar Loan (82.9 )
Adjusted debt and finance lease obligations before deferred
financing costs, discounts and premiums
$ 37,026.2  
 
Annualized quarterly OCF $ 6,800.8
Consolidated debt to annualized consolidated OCF ratio 5.4
 
Consolidated Net Debt to Annualized Consolidated OCF:
Adjusted debt and finance lease obligations before deferred
financing costs, discounts and premiums
$ 37,026.2
Cash and cash equivalents (951.1 )
Adjusted net debt and finance lease obligations before deferred
financing costs, discounts and premiums
$ 36,075.1  
 
Annualized quarterly OCF $ 6,800.8
Consolidated net debt to annualized consolidated OCF ratio 5.3
9   Our Q1 2018 mobile subscriber additions have been restated to
correct the overstatement of our and Telenet's subscriber base in
relation to (i) the removal of inactive "pay as you go subscribers"
within Telenet's postpaid subscriber base as these subscribers do
not pay a monthly subscription fee and are only billed on their
effective usage and (ii) the removal of small or medium enterprise
mobile telephony subscribers that are now considered business
customers and are no longer included in our mobile telephony
subscriber count. These adjustments resulted in reductions to our
mobile subscriber base of 49,400 and 127,300, respectively, at March
31, 2018 and 53,000 and 133,200, respectively, at December 31, 2017.
10 For purposes of calculating our average tenor, total third-party
debt excludes vendor financing.
11 Our aggregate unused borrowing capacity of $2.5 billion represents
the maximum undrawn commitments under the applicable facilities of
our continuing operations without regard to covenant compliance
calculations. Upon completion of the relevant March 31, 2019
compliance reporting requirements for our credit facilities, and
assuming no further changes from quarter-end borrowing levels, we
anticipate that the borrowing capacity of our continuing operations
will continue to be $2.5 billion.
 

Glossary

10-Q or 10-K: As used herein, the terms
10-Q and 10-K refer to our most recent quarterly or annual report as
filed with the Securities and Exchange Commission on Form 10-Q or Form
10-K, as applicable.

Adjusted Free Cash Flow (FCF): 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
condensed consolidated statements of cash flows, (b) principal payments
on amounts financed by vendors and intermediaries and (c) principal
payments on finance 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 condensed consolidated statements of cash flows.

The following table provides a reconciliation of our net cash provided
by operating activities from continuing operations to Adjusted Free Cash
Flow for the indicated periods. In addition, in order to provide
information regarding the changes to our Adjusted Free Cash Flow that we
expect will occur following the sale of the remaining Discontinued
Operations and the Switzerland Disposal Group, we also present Adjusted
Free Cash Flow on a pro forma basis for three months ended March 31,
2019 as if the sale of the remaining Discontinued Operations and the
Switzerland Disposal Group had been completed on January 1, 2019.

    Three months ended March 31,
2019     2018     2019     2018
Continuing operations Discontinued Operations (i)
in millions
 
Net cash provided by operating activities $ 306.3 $ 670.3 $ 459.1 $ 609.0
Cash payments for direct acquisition and disposition costs 12.4 1.6
Expenses financed by an intermediary(ii) 564.0 507.3 138.8 50.5
Capital expenditures, net (331.3 ) (484.2 ) (110.6 ) (161.8 )
Principal payments on amounts financed by vendors and intermediaries (1,162.8 ) (1,675.9 ) (209.6 ) (120.9 )
Principal payments on certain finance leases (13.1 ) (18.0 ) (2.7 ) (3.0 )
Adjusted FCF (624.5 ) $ (998.9 ) $ 275.0   $ 373.8  
 
Pro forma adjustments related to the sale of the remaining
Discontinued Operations and the Switzerland Disposal Group:
Sale of the Switzerland Disposal Group(iii) (40.9 )
Interest and derivative payments(iv) (21.5 )
Transitional services agreements(v) 64.8  
Pro forma Adjusted FCF(vi) $ (622.1 )
_______________
(i)   For the 2019 period, our Discontinued Operations include Germany,
Hungary, Romania and the Czech Republic and our DTH business. For
the 2018 period, our Discontinued Operations also include our former
operation in Austria through July 31, 2018.
 
(ii) For purposes of our condensed consolidated statements of cash flows,
expenses financed by an intermediary are treated as hypothetical
operating cash outflows and hypothetical financing cash inflows when
the expenses are incurred. When we pay the financing intermediary,
we record financing cash outflows in our condensed consolidated
statements of cash flows. For purposes of our Adjusted Free Cash
Flow definition, we add back the hypothetical operating cash outflow
when these financed expenses are incurred and deduct the financing
cash outflows when we pay the financing intermediary.
 
(iii) The Switzerland Disposal Group is included within our Continuing
Operations Adjusted FCF. In connection with the pending disposition,
Sunrise will acquire the Switzerland Disposal Group, the UPC Notes,
associated derivatives and certain other debt items. As a result,
this pro forma adjustment represents the Adjusted FCF of the
Switzerland Disposal Group, including 100% of the interest and
related derivative payments made during the applicable period
related to the UPC Notes.
 
(iv) Represents the estimated interest and related derivative payments
that have been made by UPC Holding in relation to the continuing UPC
operations in Poland and Slovakia during the applicable period.
These estimated payments are calculated based on Poland and
Slovakia's pro rata share of UPC Holding's OCF and UPC Holding's
aggregate interest and derivative payments during the applicable
period. Although we believe that these estimated payments represent
a reasonable estimate of the annual interest and related derivative
payments that will occur in relation to the continuing operations in
Poland and Slovakia, no assurance can be given that the actual
interest and derivative payments will be equivalent to the amounts
presented. No pro forma adjustments are required with respect to
Unitymedia's interest and derivative payments as substantially all
of Unitymedia's debt and related derivative instruments are direct
obligations of entities within the Vodafone Disposal Group. As a
result, the interest and related derivative payments associated with
such debt and derivative instruments of Unitymedia are included in
discontinued operations.
 
(v) Represents our preliminary estimate of the net cash flows that we
would have received from transitional services agreements if the
sale of the remaining Discontinued Operations and the Switzerland
Disposal Group had occurred on January 1, 2019. The estimated net
cash flows are based on the estimated revenue that we expect to
recognize from our transitional services agreements during the first
12 months following the completion of the sale of the remaining
Discontinued Operations and Switzerland Disposal Group, less the
estimated incremental costs that we expect to incur to provide such
transitional services. As a result, this pro forma adjustment
includes $39.7 million related to our discontinued operations in
Germany, Hungary, Romania and the Czech Republic, $24.4 million
related to the Switzerland Disposal Group and $0.7 million related
to our discontinued DTH business.
 
(vi) Represents the Adjusted FCF that we estimate would have resulted if
the sale of the remaining Discontinued Operations and the
Switzerland Disposal Group had been completed on January 1, 2019.
Actual amounts may differ from the amounts assumed for purposes of
this pro forma calculation. For example, our Pro forma Adjusted FCF
does not include any future benefits related to reductions in our
corporate costs as a result of our operating model rationalization
or any other potential future operating or capital cost reductions
attributable to our continuing or discontinued operations.
 

ARPU: Average Revenue Per Unit is the
average monthly subscription revenue per average cable customer
relationship or mobile subscriber, as applicable. Following the adoption
of ASU 2014-09, subscription revenue excludes interconnect fees, channel
carriage fees, mobile handset sales and late fees, but includes the
amortization of installation fees. Prior to the adoption of ASU 2014-09,
installation fees were excluded from subscription revenue. ARPU per
average cable customer relationship is calculated by dividing the
average monthly subscription revenue from residential cable and SOHO
services by the average number of cable 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 number of mobile subscribers for the period. Unless otherwise
indicated, ARPU per cable customer relationship or mobile subscriber is
not adjusted for currency impacts. ARPU per RGU refers to average
monthly revenue per average RGU, which is calculated by dividing the
average monthly subscription revenue from residential and SOHO services
for the indicated period, by the average number of the applicable RGUs
for the period. Unless otherwise noted, ARPU in this release is
considered to be ARPU per average cable customer relationship or mobile
subscriber, as applicable. Cable customer relationships, mobile
subscribers and RGUs of entities acquired during the period are
normalized. In addition, for purposes of calculating the percentage
change in ARPU on a rebased basis, we adjust the prior-year subscription
revenue, cable customer relationships, mobile subscribers and RGUs, as
applicable, to reflect acquisitions, dispositions, FX and the January 1,
2018 adoption of the new revenue recognition standard (ASU 2014-09, Revenue
from Contracts with Customers
) on a comparable basis with the
current year, consistent with how we calculate our rebased growth for
revenue and OCF, as further described in the body of this release.

ARPU per Mobile Subscriber: Our ARPU per
mobile subscriber calculation that excludes interconnect revenue refers
to the average monthly mobile subscription revenue per average mobile
subscriber and is calculated by dividing the average monthly mobile
subscription revenue (excluding handset sales and late fees) for the
indicated period, by the average of the opening and closing balances of
mobile subscribers in service for the period. Our ARPU per mobile
subscriber calculation that includes interconnect revenue increases the
numerator in the above-described calculation by the amount of mobile
interconnect revenue during the period.

Basic Video Subscriber: 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. 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.

Blended fully-swapped debt borrowing cost:
the weighted average interest rate on our aggregate variable- and
fixed-rate indebtedness (excluding finance leases and including vendor
financing obligations), including the effects of derivative instruments,
original issue premiums or discounts and commitment fees, but excluding
the impact of financing costs.

B2B: Business-to-Business.

Cable Customer Relationships: the number of
customers who receive at least one of our video, internet or telephony
services that we count as RGUs, without regard to which or to how many
services they subscribe. Cable 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 Cable
Customer Relationships. We exclude mobile-only customers from Cable
Customer Relationships.

Customer Churn: the rate at which customers
relinquish their subscriptions. The annual rolling average basis is
calculated by dividing the number of disconnects during the preceding 12
months by the average number of customer relationships. For the purpose
of computing churn, a disconnect is deemed to have occurred if the
customer no longer receives any level of service from us and is required
to return our equipment. A partial product downgrade, typically used to
encourage customers to pay an outstanding bill and avoid complete
service disconnection, is not considered to be disconnected for purposes
of our churn calculations. Customers who move within our cable footprint
and upgrades and downgrades between services are also excluded from the
disconnect figures used in the churn calculation.

DTH Subscriber: a home, residential
multiple dwelling unit or commercial unit that receives our video
programming broadcast directly via a geosynchronous satellite.

Enhanced Video Subscriber: a home,
residential multiple dwelling unit or commercial unit that receives our
video service over our broadband network or through a partner network
via a digital video signal while subscribing to any recurring monthly
service that requires the use of encryption-enabling technology.
Enhanced Video Subscribers 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.

Homes Passed: 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.

Internet Subscriber: a home, residential
multiple dwelling unit or commercial unit that receives internet
services over our networks, or that we service through a partner
network. Our Internet Subscribers do not include customers that receive
services from dial-up connections.

MDU: Multiple Dwelling Unit.

Mobile Subscriber Count: the number of
active SIM cards in service rather than services provided. For example,
if a mobile subscriber has both a data and voice plan on a smartphone
this would equate to one mobile subscriber. Alternatively, a subscriber
who has a voice and data plan for a mobile handset and a data plan for a
laptop would be counted as two mobile subscribers. Customers who do not
pay a recurring monthly fee are excluded from our mobile telephony
subscriber counts after periods of inactivity ranging from 30 to 90
days, based on industry standards within the respective country. In a
number of countries, our mobile subscribers receive mobile services
pursuant to prepaid contracts.

MVNO: Mobile Virtual Network Operator.

NPS: Net Promoter Score.

OCF: As used herein, OCF has the same
meaning as the term "Adjusted OIBDA" that is referenced in our 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 OCF is presented in
the following table:

    Three months ended March 31,
2019     2018

Continuing
operations

   

Discontinued
Operations

Continuing
operations

   

Discontinued
Operations

in millions
 
Operating income $ 105.5 $ 504.1 $ 117.6 $ 375.5
Share-based compensation expense 67.3 3.5 42.7 3.1
Depreciation and amortization 939.6 1,040.7 255.7
Impairment, restructuring and other operating items, net 70.9   9.3   60.7   2.9
Total OCF $ 1,183.3   $ 516.9   $ 1,261.7   $ 637.2

OCF margin: calculated by dividing OCF by
total revenue for the applicable period.

OFCF: As used herein, OFCF represents OCF
less property and equipment additions. OFCF is an additional metric that
we use to measure the performance of our operations after considering
the level of property and equipment additions incurred during the
period. For limitations of OFCF, see the definition of OCF.

OFCF margin: OFCF margin is calculated by
dividing OFCF by total revenue for the applicable period.

Property and equipment additions (P&E Additions):
includes capital expenditures on an accrual basis, amounts financed
under vendor financing or finance lease arrangements and other non-cash
additions.

RGU: A Revenue Generating Unit is
separately a Basic Video Subscriber, Enhanced Video Subscriber, DTH
Subscriber, Internet Subscriber or Telephony Subscriber. A home,
residential multiple dwelling unit, or commercial unit may contain one
or more RGUs. For example, if a residential customer in our U.K. 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 RGU counts exclude our separately reported
postpaid and prepaid mobile subscribers.

SIM: Subscriber Identification Module.

SOHO: Small or Home Office Subscribers.

Telephony Subscriber: a home, residential
multiple dwelling unit or commercial unit that receives voice services
over our networks, or that we service through a partner network.
Telephony Subscribers exclude mobile telephony subscribers.

Two-way Homes Passed: homes passed by those
sections of our networks that are technologically capable of providing
two-way services, including video, internet and telephony services.

U.S. GAAP: United States Generally Accepted
Accounting Principles.

YoY: Year-over-year.

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