Liberty Global Reports Third Quarter 2019 Results
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%
Denver, Colorado: November 6, 2019
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."
Continuing Operations Including Switzerland
Q3 2019 | YTD 2019 | |
Organic RGU | (76,300) | (80,400) |
Additions | ||
Revenue Growth2 | (0.6)% | (0.7)% |
OCF Growth2 | (4.1)% | (3.0)% |
OFCF Growth2 | 34.8 % | 42.1 % |
Continuing Operations Excluding Switzerland3 | ||
Q3 2019 | YTD 2019 | |
Organic RGU | (62,200) | 4,600 |
Additions | ||
Revenue Growth2 | (0.2)% | (0.3)% |
OCF Growth2 | (2.9)% | (1.8)% |
OFCF Growth2 | 63.1 % | 79.7 % |
2019 Guidance5 | 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 |
NASDAQ: LBTYA | LBTYB | LBTYK
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"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 liquidity6 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."
Contacts
Investor Relations | |
Matt Coates | +44 20 8483 6333 |
John Rea | +1 303 220 4238 |
Stefan Halters | +44 20 8483 6211 |
Corporate Communications | |
Molly Bruce | +1 303 220 4202 |
Matt Beake | +44 20 8483 6428 |
Corporate Website
www.libertyglobal.com
About Liberty Global
Liberty Global (NASDAQ: LBTYA, LBTYB and LBTYK) is 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.
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Q3 Highlights (on a continuing operations basis unless otherwise noted)
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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) |
- Revenue and OCF YoY growth rates are on a rebased basis
- 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
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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
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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 | Nine months ended | ||||||||||||||||||
September 30, | Increase/(decrease) | September 30, | Increase/(decrease) | ||||||||||||||||
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) | |||||||||||||||||
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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
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Liberty Global plc published this content on 06 November 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 November 2019 22:19:05 UTC