Liberty Global : Sunrise Holding Group Combined Financial Statements – December 31, 2023

The Sunrise Holding Group

Combined Financial Statements

December 31, 2023

The Sunrise Holding Group
TABLE OF CONTENTS
	Page
	Number
PART I
Forward-lookingStatements	I-1
Business	I-4
Risk Factors	I-19
PART II
Independent Auditors' Report	II-1
Combined Balance Sheets as of December 31, 2023 and 2022	II-3
Combined Statements of Operations for the Years Ended December 31, 2023, 2022 and 2021	II-5
Combined Statements of Comprehensive Earnings (Loss) for the Years Ended December 31, 2023, 2022 and 2021...	II-6
Combined Statements of Equity for the Years Ended December 31, 2023, 2022 and 2021	II-7
Combined Statements of Cash Flows for the Years Ended December 31, 2023, 2022 and 2021	II-10
Notes to Combined Financial Statements	II-13
Management's Discussion and Analysis of Financial Condition and Results of Operations	II-53

PART I

FORWARD-LOOKING STATEMENTS

Certain statements in this annual report constitute forward-looking statements. To the extent that statements in this annual report are not recitations of historical fact, such statements constitute forward-looking statements, which, by definition, involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. In particular, statements under Part I. Business, Part I. Risk Factors and Part II. Management's Discussion and Analysis of Financial Condition and Results of Operations may contain forward-looking statements, including statements regarding our business, product, foreign currency, hedging and finance strategies, our property and equipment additions, subscriber growth and retention rates, competitive, regulatory and economic factors, the timing and impacts of proposed transactions, the maturity of our markets, the potential impact of the coronavirus (COVID-19) and other large-scale health crises on our company, the anticipated impacts of new legislation (or changes to existing rules and regulations), anticipated changes in our revenue, costs or growth rates, our liquidity, credit risks, foreign currency risks, interest rate risks, target leverage levels, debt covenants, our future projected contractual commitments and cash flows and other information and statements that are not historical fact. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. In evaluating these statements, you should consider the risks and uncertainties discussed under Part I. Risk Factors, as well as the following list of some, but not all, of the factors that could cause actual results or events to differ materially from anticipated results or events:

• economic and business conditions and industry trends in the countries in which we operate;
• the competitive environment in the industries and in the countries in which we operate, including competitor responses to our products and services;
• fluctuations in currency exchange rates and interest rates;
• instability in global financial markets, including sovereign debt issues, currency instability and related fiscal reforms;
• consumer disposable income and spending levels, including the availability and amount of individual consumer debt, as a result of, among other things, inflationary pressures;
• changes in consumer television viewing, mobile and broadband usage preferences and habits;
• consumer acceptance of our existing service offerings, including our broadband internet, video, fixed-line telephony, mobile and business service offerings, and of new technology, programming alternatives and other products and services that we may offer in the future;
• our ability to manage rapid technological changes, including our ability to adequately manage our legacy technologies and transformation, and the rate at which our current technology becomes obsolete;
• our ability to maintain or increase the number of subscriptions to our broadband internet, video, fixed-line telephony and mobile service offerings and our average revenue per household;
• our ability to provide satisfactory customer service, including support for new and evolving products and services;
• our ability to maintain or increase rates to our subscribers or to pass through increased costs to our subscribers, including with respect to our significant property and equipment additions, as a result of, among other things, inflationary pressures;
• the impact of our future financial performance, or market conditions generally, on the availability, terms and deployment of capital;
• changes in, or failure or inability to comply with, government regulations and legislation in the countries in which we operate and adverse outcomes from regulatory proceedings;
• government intervention that requires opening our broadband distribution networks to competitors, as well as any changes to our accreditations or licenses;
• our ability to maintain and further develop our direct and indirect distribution channels;
• the effect of perceived health risks associated with electromagnetic radiation from base stations and associated equipment;

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• the effect on our business of strikes or collective action by certain of our employees that are represented by trade unions;
• our ability to obtain regulatory approval and satisfy other conditions necessary to close acquisitions, dispositions, combinations or joint ventures and the impact of conditions imposed by competition and other regulatory authorities in connection with acquisitions, combinations or joint ventures;
• our ability to successfully acquire new businesses or form joint ventures and, if acquired or joined, to integrate, realize anticipated efficiencies from and implement our business plan with respect to the businesses we have acquired or joined or that we expect to acquire or join;
• changes in laws or treaties relating to taxation, or the interpretation thereof, in the countries in which we operate;
• changes in laws, monetary policies and government regulations that may impact the availability or cost of capital and the derivative instruments that hedge certain of our financial risks;
• the ability of suppliers and vendors to timely deliver quality products, equipment, software, services and access;
• the activities of device manufacturers, and our operating companies' ability to secure adequate and timely supply of handsets that experience high demand;
• the availability of attractive programming for our video services and the costs associated with such programming, including, but not limited to, production costs, retransmission and copyright fees payable to public and private broadcasters;
• uncertainties inherent in the development and integration of new business lines and business strategies;
• our ability to adequately forecast and plan future network requirements;
• the availability and cost of capital for the acquisition, maintenance and/or development of telecommunications networks, products and services;
• the availability, cost and regulation of spectrum;
• problems we may discover post-closing with the operations, including the internal controls and financial reporting processes, of businesses we acquire;
• successfully integrating businesses or operations that we acquire or partner with on the timelines or within the budgets estimated for such integrations;
• operating costs, customer loss and business disruption, including maintaining relationships with employees, customers, suppliers or vendors, may be greater than expected in connection with our acquisitions, dispositions or joint ventures;
• our ability to realize the expected synergies from our acquisitions or joint ventures in the amounts anticipated or on the anticipated timelines;
• our ability to anticipate, protect against, mitigate and contain loss of our and our customers' data as a result of cyber attacks on us;
• the leakage of sensitive customer or company data or the failure to comply with applicable data protection laws, regulations and rules;
• a failure in our network and information systems, whether caused by a natural disaster or a security breach, and unauthorized access to our networks;
• the outcome of any pending or threatened litigation;
• the loss of key employees and the availability of qualified personnel;
• our capital structure and factors related to our debt arrangements;
• changes in the nature of key strategic relationships with partners and joint venturers;
• the risk of default by counterparties to our derivative and other financial instruments and undrawn debt facilities; and
• events that are outside of our control, such as political unrest in international markets, terrorist attacks, armed conflicts, malicious human acts, natural disasters, epidemics, pandemics (such as COVID-19) and other similar events, including the ongoing invasion of Ukraine by Russia and the Israeli-Palestinian conflict.

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The broadband distribution and mobile service industries are changing rapidly and, therefore, the forward-looking statements of expectations, plans and intents in this annual report are subject to a significant degree of risk. These forward- looking statements and the above-described risks, uncertainties and other factors speak only as of the date of this annual report, and 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 other change in events, conditions or circumstances on which any such statement is based. Readers are cautioned not to place undue reliance on any forward-looking statement.

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BUSINESS

In December 2023, we changed our name from the UPC Holding Group to the Sunrise Holding Group. We will not distinguish between our prior and current name and will refer to our current name throughout this annual report. In the following text, the terms, "we", "our", "our company" and "us" refer to the Sunrise Holding Group, as defined and described below. Unless otherwise indicated, operational data, including subscriber statistics and product offerings, is presented as of December 31, 2023.

Introduction

Sunrise HoldCo IV B.V. (formerly UPC Holding B.V.) (Sunrise HoldCo IV), UPC Slovakia Holding I B.V. (UPC Slovakia Holding) and Liberty Global Finance II (UK) Limited (LG Finance II) are wholly-owned subsidiaries of Liberty Global Ltd. (Liberty Global). The accompanying discussion includes the historical financial information of Sunrise HoldCo IV and its subsidiaries (Sunrise), UPC Slovakia Holding and its subsidiaries (UPC Slovakia) and LG Finance II (collectively, the Sunrise Holding Group).

The Sunrise Holding Group is an international provider of broadband internet, video, fixed-line telephony and mobile services to residential customers and businesses in Europe. Our continuing operations comprise businesses that provide residential and business-to-business (B2B) communications services in Switzerland, through "Sunrise", and Slovakia, through "UPC Slovakia". Through March 31, 2022, we provided residential and B2B communications services in Poland. On April 1, 2022, UPC Poland Holding B.V. (UPC Poland) completed the sale of our operations in Poland (UPC Polska).

We design our services to enable our customers to access the digital world on their own terms, with top quality connectivity at the core of our strategy. Our extensive broadband network enables us to deliver ultra-high-speed internet service across our markets, be it through fiber, cable and mobile technology, and we strive to extend our reach and reinforce our speed leadership. Across our footprint, we offer converged fixed and mobile experiences in and out of the home, and it is our ambition to further enhance this proposition through strategic acquisitions and partnerships and through product development to offer our customers a world-class suite of products and services. As part of this strategy, we deliver mobile services to our customers as a mobile network operator at Sunrise and as a reseller of subscriber identification module (SIM) cards provided by SWAN, a.s. at UPC Slovakia.

Liberty Global is an international fixed-mobile convergence (FMC) communications company. It delivers market-leading connectivity and entertainment products through next-generation networks and provides over 85 million connections (at December 31, 2023) across Europe. Liberty Global's businesses operate under some of the best-known consumer brands, including Sunrise in Switzerland, Telenet in Belgium, Virgin Media in Ireland, UPC Slovakia in Slovakia, Virgin Media-O2 in the United Kingdom (U.K.) and VodafoneZiggo in the Netherlands. Liberty Global, through its ventures arm, Liberty Global Ventures, has investments in more than 75 companies and funds across the content, technology and infrastructure industries, including stakes in companies such as ITV plc, Televisa Univision, Inc., Plume Design, Inc., AE Group Sàrl (AtlasEdge) and Formula E Holdings Ltd.

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Operating Data

The following table presents certain operating data of our combined entities as of December 31, 2023:

	Sunrise(8)		UPC Slovakia		Total
FIXED
Footprint
Homes Passed(1)	2,707,700	642,400	3,350,100
Fixed-LineCustomer Relationships(2)
Fixed-lineCustomer Relationships	1,468,000	177,200	1,645,200
RGUs per Customer Relationship	2.26	2.22	2.25
Subscribers (RGUs)(3)
Internet(4)	1,180,400	144,800	1,325,200
Video(5)	1,199,700	161,700	1,361,400
Telephony(6)	934,200		87,500		1,021,700
Total RGUs	3,314,300	394,000	3,708,300
MOBILE
Mobile Subscribers(7)
Postpaid	2,467,100		-	2,467,100
Prepaid	369,200		-		369,200
Total Mobile Subscribers	2,836,300		-	2,836,300
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1. Homes Passed are homes, residential multiple dwelling units or commercial units that can be connected to our networks without materially extending the distribution plant. 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. Due to the fact that we do not own the partner networks (as defined below) used at Sunrise (see note 8 below), we do not report homes passed for Sunrise's partner networks.
2. Fixed-LineCustomer Relationships are the number of customers who receive at least one of our internet, video or telephony services that we count as Revenue Generating Units (RGUs), without regard to which or to how many services they subscribe. Fixed-Line 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 Fixed-Line Customer Relationships. We exclude mobile-only customers from Fixed-Line Customer Relationships.
3. An RGU is, separately, an Internet Subscriber, Video Subscriber or Telephony Subscriber (each as defined below). A home, residential multiple dwelling unit or commercial unit may contain one or more RGUs. For example, if a residential customer subscribed to our broadband internet service, video service and fixed-line telephony service, the customer would constitute three RGUs. Total RGUs is the sum of Internet, Video and Telephony Subscribers. RGUs generally are counted on a unique premises basis such that a given premise does not count as more than one RGU for any given service. However, 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 internet, video 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., certain preferred 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.
4. Internet Subscribers are homes, residential multiple dwelling units or commercial units that receive internet services over our networks or that we service through a partner network. At Sunrise, we offer a 10 Mbps internet service to our Video

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Subscribers without an incremental recurring fee. Our Internet Subscribers at Sunrise include approximately 39,800 subscribers who have requested and received this service.

1. Video Subscribers are homes, residential multiple dwelling units or commercial units that receive our video services over our broadband network or through a partner network. We have approximately 31,000 "lifeline" customers that are counted on a per connection basis, representing the least expensive regulated tier of video cable service, with only a few channels.
2. Telephony Subscribers are homes, residential multiple dwelling units or commercial units that receive voice services over our networks or that we service through a partner network. Telephony Subscribers exclude mobile telephony subscribers. At Sunrise, we offer a basic phone service to our Video Subscribers without an incremental recurring fee. Our Telephony Subscribers at Sunrise include approximately 128,400 subscribers who have requested and received this service.
3. Our Mobile Subscriber count represents 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 data and voice 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 Subscriber count after periods of inactivity ranging from 30 to 90 days, based on industry standards within the respective country. At Sunrise, our Mobile Subscribers receive mobile services pursuant to prepaid contracts.
4. Pursuant to service agreements, Sunrise offers broadband internet, video and telephony services over networks owned by third-party operators (partner networks), and following the acquisition of Sunrise, also services homes through Sunrise's agreements with Swisscom, Swiss Fibre Net and local utilities. Under these agreements, RGUs are only recognized if there is a direct billing relationship with the customer. Homes passed or serviceable through the above service agreements are not included in Sunrise's homes passed count as we do not own these networks. Including these arrangements, our operations at Sunrise have the ability to offer fixed services to the national footprint.
   Additional General Notes to Table:
   Most of our operations provide broadband internet, video, telephony, mobile, data or other business services. Certain of our business service revenue is derived from small or home office (SOHO) subscribers that pay a premium price to receive enhanced service levels along with internet, video 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 business SOHO subscribers, we generally do not count customers of business services as customers or RGUs for external reporting purposes.
   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) our bad debt collection efforts 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.

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Products and Services

Our main products and services are intelligent WiFi and internet services, video, mobile and telephony services.

Intelligent WiFi and Internet Services

Connectivity is a critical building block for vibrant communities. Following the COVID-19 pandemic, it has become apparent that all aspects of society, including families, businesses, education and healthcare, to name a few, continue to rely heavily on connectivity and the digital services that depend on it. To meet our customers' expectations of seamless connectivity, we developed a fully digital, cloud-based connectivity ecosystem that we call "ONE Connect", built on top of our fiber-rich fixed broadband network and expansive mobile network. ONE Connect is orchestrated by a fully cloud-based digital journey, enabling fast and flexible introduction of new hardware and services, as well as cloud-to-cloud open API integration, simplifying the on-boarding of new services and devices. The devices used within our ONE Connect ecosystem are connected and protected through our secure gateway and virtual private network (VPN), both at home and on the go. At home, our customers can benefit from the gigabit speeds enabled by our "Connect Box" (as described below), as well as "Intelligent WiFi", which has optimization functionalities, such as the ability to adapt to the number of people and devices online at any given time in order to improve and extend wireless connectivity speeds. We have completed the rollout of our award-winning Intelligent WiFi across our markets. Our Smart Security services complement these capabilities by offering a layer of security for all customer connected devices. In addition, we offer "Smart Home" bundles in select markets, enabling those customers to take their smart home ambitions to the next level, including enhanced entertainment, home automation and home security. Finally, our "Connect App" is the digital touchpoint that allows customers to access and manage all of our services.

Our Connect Box is a next generation Intelligent WiFi and telephony gateway that enables us to maximize the impact of our ultrafast broadband networks by providing reliable wireless connectivity anywhere in the home. This gateway can be self- installed and allows customers to customize their home WiFi service. Our latest versions of the gigabit Connect Box are based on DOCSIS 3.1 technology and WiFi 6, providing even better in-home WiFi service. Our new DOCSIS 3.1 Connect Box runs our "One Firmware" stack, a middleware software system based on the Reference Design Kit for Broadband (RDK-B). RDK- B is an open source initiative with wide participation from operators, device manufacturers and silicon vendors that standardizes core functions used in broadband devices, set-top boxes and internet of things (IoT) solutions. We have extended the One Firmware stack to support our ONE Connect ecosystem. One Firmware runs on system-on-a-chip (SOC) technology from multiple vendors and can run on any SOC that is RDK-B compliant, enabling greater speed and agility for on-boarding of new customer premises equipment (CPE) platforms and ecosystem features, allowing us to build once and port to many. During 2023, we continued the roll out of One Firmware to our legacy DOCSIS 3.0 WiFi 5 GW and our next generation DOCSIS 3.1 WiFi 6 GW. In addition, we completed the porting activity of One Firmware to our new XGSPON WiFi 6 gateways, which we have now rolled out in Switzerland. To support the adoption of fiber-to-the-home, cabinet, building or node networks (fiber-to-the-home/-cabinet/-building/-node is referred to herein as FTTx) access in both on-net and off-net scenarios, we introduced XGSPON (an updated standard for passive optical networks that supports higher-speed, 10 Gbps symmetrical data transfers) and Ethernet-based Connect Boxes with WiFi 6, providing speeds up to 10 Gbps that run our One Firmware and support our ONE Connect ecosystem. In 2023, we introduced a new WiFi 6 Mesh device, ONE Connect Mesh, which provides our WiFi Mesh system that is fully orchestrated and optimized via the ONE Connect Platform.

In 2023, we provided the world's first test of DOCSIS 4 technology on live network infrastructure, capable of 10 Gbps speeds over Hybrid Fiber Coaxial (HFC) Plant with upgraded passive components, emphasizing the re-usability of our existing coaxial cable. The DOCSIS 4 CPE and node was the culmination of joint development activity with our vendors and silicon partners.

In 2023, we added a cybersecurity feature to our ONE Connect Platform, providing our customers with safe browsing and advanced network protection features.

Our Connect Box is available in each of our markets, and during 2023, approximately 800,000 of our customers had a Connect Box. We also offer our Connect App that, among other things, allows our customers to optimize their WiFi coverage and manage their connected devices. In addition, we provide Intelligent WiFi mesh boosters, which increase speed, reliability and coverage by adapting to the environment at home.

Internet speed is of crucial importance to our customers, as they spend more time streaming video and other bandwidth- heavy services on multiple devices. Our extensive broadband network enables us to deliver ultra-high-speed internet services across our markets. Our residential subscribers access the internet via cable or XGSPON modems connected to their internet

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capable devices, or wirelessly via WiFi. We offer multiple tiers of broadband internet service, including gigabit or greater speeds across our entire footprint. The speed of service depends on the customer location and their selected service.

We offer value-added broadband services in certain of our markets for an incremental charge. These services include Intelligent WiFi features, security (e.g., in-home network protection, anti-virus, firewall and spam protection), Smart Home services and online storage solutions and web spaces. Subscribers to our internet service pay a monthly fee based on the tier of service selected. We determine pricing for each different tier of internet service through an analysis of speed, market conditions and other factors.

Mobile Services

Mobile services are another key building block for us to provide customers with seamless connectivity. Sunrise offers mobile services as a mobile network provider and UPC Slovakia delivers mobile services as a reseller of SIM cards provided by SWAN, a.s. The majority of subscribers take a postpaid service plan, which often has an agreed monthly fee for a set duration (typically 1 to 2 years). The monthly fee will vary depending on the service package selected. Service packages can have different levels of data allowances, voice minutes and network speed, as well as other differing aspects, such as roaming charges and contract duration. Postpaid services are also offered as a bundle with fixed services and by taking a "converged" offering customers typically receive some benefits, such as lower total cost or additional features. Postpaid services are offered to both business and retail consumers. In addition, we offer prepaid mobile services at Sunrise, where the customers pay in advance for a pre-determined amount of airtime or data and which generally have no minimum contract term.

Video Services

Our video service is, and continues to be, one of the foundations of our product offerings in our markets. Our cable operations offer multiple tiers of digital video programming and audio services, starting with a basic video service. Subscribers to our basic video service pay a fixed monthly fee and receive digital video channels in high definition (HD) and a growing number of ultra-high definition 4K resolution (4K) channels, as well as an electronic programming guide. We tailor our video services in each country of operation based on programming preferences, culture, demographics and local regulatory requirements.

We also offer a variety of premium channel packages to meet the interests of our subscribers. For an additional monthly charge, a subscriber may upgrade to one of our extended digital tier services and receive an increased number of video channels, including the channels in the basic tier service and additional HD and 4K channels. Our channel offerings include general entertainment, sports, movies, series, documentaries, lifestyles, news, adult, children and ethnic and foreign channels.

Discounts to our monthly service fees are available to any subscriber who selects a bundle of two or more of our services (bundled services): internet, video, fixed-line telephony and mobile services. Bundled services consist of double-play for two services, triple-play for three services and quad-play for four services.

To meet customer demands, we have enhanced our video services with additional relevant content services and features, which increases viewing satisfaction and addresses individual user needs. Our latest next generation product suite is called "Horizon 5", a cloud-based,multi-screen entertainment platform that combines linear television (including recording and replay features), premium video-on-demand (VoD) offerings, an increasing amount of integrated premium global and local video applications and mobile viewing into one entertainment experience. Horizon 5 comes with a state-of-the-art personal user interface that is intuitively easy to navigate. Content recommendations and favorite channel settings can be customized to individual user profiles. Video playback control, navigation shortcuts and content searches can all be conducted via a voice control button on the remote control, a feature highly appreciated by our customers. Horizon 5, marketed under the name "Sunrise TV", is available at Sunrise on the latest set-top boxes and is capable of delivering 4K video content, including high dynamic range. The platform also features a 'Personal Home' page that automatically aggregates content, both linear and VoD, in a streamlined user interface, based on the user's viewing habits.

In the summer of 2020, we launched our first internet-protocol(IP)-only streaming device, which runs the full Horizon 5 product suite, using only a small puck-like device that can be tucked away behind a television screen. This all-IP mini 4K capable set-top box has extremely low power consumption and its casing is made from recycled plastic, proudly winning us the Digital TV Europe's Video Tech Innovation Sustainability Award in December 2020, as well as the Red Dot Product Design Award in 2021. We have launched the all-IP 4K capable set-top box at Sunrise and intend to roll out this product to other markets in coming years.

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