Liberty Global : UPC Holding Reports Preliminary Q2 2021 Results

UPC Holding Reports Preliminary Q2 2021 Results

Sunrise UPC identifies CHF 50 million of incremental synergies Swiss MVNO migration successfully completed in early July Robust topline growth drives financial performance in CEE

Denver, Colorado July 29, 2021: Liberty Global plc ("Liberty Global") (NASDAQ: LBTYA, LBTYB, LBTYK) is today providing selected, preliminary unaudited financial and operating information for the UPC Holding borrowing group for the three months ("Q2") ended June 30, 2021 as compared to the results for the same period in the prior year (unless otherwise noted). The financial and operating information contained herein is preliminary and subject to change. We expect to issue the June 30, 2021 unaudited condensed combined financial statements for our UPC Holding borrowing group prior to the end of August 2021, at which time they will be posted to the investor relations section of our website (www.libertyglobal.com) under the "Fixed Income" heading. Convenience translations provided herein are calculated as of June 30, 2021

UPC Holding Group ("UPC Holding") provides market-leading converged broadband services through next-generation networks and innovative technology platforms. The information in this release relates to our operations in Switzerland, Poland and Slovakia, unless otherwise indicated (Poland and Slovakia together are referred to as "CEE"). At June 30, 2021, our operations connected 3.2 million customers subscribing to 7.1 million television, internet and fixed-line telephony services and served 2.6 million mobile subscribers

André Krause, CEO of Sunrise UPC in Switzerland, commented:

"Despite increased competition in the Swiss market, we achieved a strong Q2 and continued our considerable commercial momentum from Q1. Our operational KPIs show that we are gaining market share and we are delivering on our financial KPIs. With our harmonized B2B portfolio, our strong partnerships in the sports area, our synergy projects and things to come like a combined residential FMC portfolio, we will continue to set new benchmarks for the Swiss market."

Operating and strategic highlights:

• Sunrise UPC is executing its strategic plan towards becoming a national converged champion
• • On fixed, Sunrise UPC continued to see strong sales momentum combined with stable low churn leading to 6,100 broadband adds
  • Our video base declined by 2,000 subscribers, as strong growth of 7,000 enhanced video adds was offset by attrition of 10,000 in our legacy basic video base
  • Extending our Swiss ice-hockey National League broadcasting rights strengthened our position in Swiss sports, securing MySports as the "Home of Hockey" in Switzerland in the long term
  • Demand for mobile postpaid1 remained strong with 40,500 net adds across all brands driven by compelling FMC bundles and our leading 5G network quality, alongside an increase of 4,000 in our legacy prepaid base

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• • Combined FMC penetration continues to grow, reaching 56% of our broadband base in Q2, including customers across brands, the highest in the Swiss market
  • Harmonized B2B portfolio successfully launched, supporting the uplift of mobile subscriptions, broadband connections and leading to growth in all B2B segments during Q2, except for COVID-19 impacted wholesale voice
  • First synergy projects executed: successful migration of UPC mobile customers to our own network and completed organizational restructuring. Incremental CHF 50 million of synergies identified on top of the original cost, capex and revenue synergy target of CHF 275 million, mostly from DSL offloading
  • 2021 guidance reiterated(i): returning to revenue growth, low-single-digit Segment Adjusted EBITDA decline and mid-single-digit OFCF decline, with all metrics including costs to capture2 of approximately CHF 150 million3
• UPC Poland continues extending its high-speed network reach to drive FMC via MVNO with Play
• • Steady increase of 8,000 adds in our broadband CEE subscriber base in line with Q2 2020, largely driven by growth in new build areas
  • UPC's 4K Mini TV Box with Horizon 4 interface already reaches a base of nearly 80,000 customers in Poland
  • Continued growth of Polish mobile base with 17,500 net postpaid adds in Q2, taking our total base to 105,000, driven by cross selling of converged family offers
• Swiss Q2 Customer ARPU of CHF 68.60 decreased 1.4% YoY on a reported basis and 0.8% YoY on a rebased4 basis as a result of the on-going competitive environment
• CEE Q2 Customer ARPU of €19.27 declined 0.1% YoY on a reported basis and increased 0.3% YoY on a rebased basis, due to aggressive pricing to promote volume growth
• Total Customer Relationships were down 1,000 in Q2, as compared to a loss of 13,000 in Q2 2020
• • Switzerland lost 4,000 customers in Q2, as broadband growth was offset by legacy basic video losses
  • CEE added 3,000 customers in Q2, in line with 3,000 of customer adds in Q2 2020

1. Segment Adjusted EBITDA and Operating Free Cash Flow are non-GAAP measures. See the Glossary for definitions. Quantitative reconciliations to net earnings/loss (including net earnings/loss growth rates) for our Segment Adjusted EBITDA and Adjusted OFCF guidance cannot be provided without unreasonable efforts as we do not forecast certain non-cash charges including; the components of non-operating income/expense, depreciation and amortization, and impairment, restructuring and other operating items included in net earnings/loss. The items we do not forecast may vary significantly from period to period

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Financial highlights:

• Revenue of €792.7 million in Q2 increased 110% YoY on a reported basis and 1.4% YoY on a rebased basis
• • Swiss revenue increased 152% YoY on a reported basis, largely due to the contribution of Sunrise, and 1.3% YoY on a rebased basis, primarily due to the net effect of (i) higher mobile revenue driven by an increase in subscribers, (ii) lower revenue from handset sales, (iii) an increase in B2B revenue related to wholesale services and (iv) a decrease in cable subscription revenue due to lower voice usage and video revenue
  • CEE revenue increased 2.5% YoY on a reported basis and 2.9% YoY on a rebased basis, primarily due to (i) an increase in residential cable subscription revenue driven by continued customer growth in new build areas and (ii) an increase in all B2B segments
• Net loss increased 289% on a reported basis in Q2 to €117.0 million, largely driven by the negative impact of (i) an increase in losses on extinguishment of debt, (ii) an increase in losses on derivative instruments and (iii) an increase in interest expense, partially offset by (a) an increase in Segment EBITDA and (b) an increase in foreign currency transaction gains
• Segment Adjusted EBITDA of €296.9 million in Q2 increased 60.7% YoY on a reported basis and declined 2.6% YoY on a rebased basis

• • Swiss Adjusted EBITDA increased 80.6% YoY on a reported basis, largely due to the contribution of Sunrise, and declined 3.1% on a rebased basis, primarily due to (i) €7.3 million of costs to capture, (ii) higher growth related opex, primarily due to an increase in marketing spend and investments in B2B, and (iii) higher T&I costs
  • CEE Adjusted EBITDA increased 2.9% YoY on a reported basis and increased 3.4% on a rebased basis, largely driven by the aforementioned revenue increase and a decrease in programming spend
• Q2 property and equipment additions were 15.1% of revenue, down from 18.2% in the prior year period

• • The relative Q2 decrease was largely driven by the contribution of Sunrise. Q2 property and equipment additions were 15.0% of revenue for Switzerland and 15.8% of revenue for CEE
• OFCF of €176.9 million in Q2 increased 52.2% YoY on a reported basis, largely due to the contribution of Sunrise, and 2.6% on a rebased basis, as compared to €116.2 million in Q2 2020, as the increase in Adjusted EBITDA was offset by the rebased increase in property and equipment additions
• • Swiss OFCF of €144.7 million in Q2 increased 65.4% YoY on a reported basis, largely due to the contribution of Sunrise, and increased 0.6% on a rebased basis, including the adverse impact of €18.2 million of costs to capture
• At June 30, 2021, our fully-swappedthird-party debt borrowing cost was 3.74% and the average tenor of our third-party debt (excluding vendor financing) was 8 years
• At June 30, 2021, and subject to the completion of our corresponding compliance reporting requirements, the ratios of Net Senior Debt and Net Total Debt to Annualized EBITDA (last two quarters annualized) for UPC Holding were 2.37x and 3.75x, respectively, as calculated in accordance with our most restrictive covenants and reflecting the exclusion of Credit Facility Excluded Amounts as defined in the respective credit agreements

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• • Vendor financing obligations are not included in the calculation of our leverage covenants. If we were to include these obligations in our leverage ratio calculation and not reflect the exclusion of the Credit Facility Excluded Amounts, the ratio of Total Net Debt to Annualized EBITDA for UPC Holding would have been 4.24x at June 30, 2021
• At June 30, 2021, we had maximum undrawn commitments of €716.6 million. When our Q2 compliance reporting requirements have been completed and assuming no change from June 30, 2021 borrowing levels, we anticipate the full €716.6 million of borrowing capacity to be available
• • During Q2 2021, the UPC Revolving Facility was amended to provide for maximum borrowing capacity of €736.4 million, including €23.0 million under an ancillary facility
• In April 2021, UPC Holding issued $1,250.0 million Senior Secured Notes due 2031 and entered into (i) a $1,925.0 million term loan facility (UPC Facility AX) and (ii) a €862.5 million term loan facility (UPC Facility AY). Proceeds were used to redeem in full the €540.0 million Senior Secured Notes due 2027 and to prepay in full UPC Facilities AV, AV1, AW and AW1e
• • The new UPC Facility AX and UPC Facility AY are structured as Sustainability Linked Loans. This means three KPIs will have an impact on the future margin on the loan. First through a commitment to announce a combined Sunrise UPC ESG Strategy by June 30, 2022. Beyond that there will be annual tests for Sunrise UPC, starting at year-end, that consist of testing for a 10% annual improvement in network efficiency and a move to 100% renewable energy. These targets are in line with Liberty Global's ESG strategy and sustainability commitments

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Operating Statistics Summary

As of and for the

three months ended

June 30,

		2021			2020
Footprint
Homes Passed............................................................................................................................		6,769,000			6,595,100
Fixed-Line Customer Relationships
Fixed-LineCustomer Relationships........................................................................................		3,203,900			2,681,500
Q2 Organic5 Fixed-Line Customer Relationship net losses............................................		(1,300)			(13,300)
Q2 Monthly ARPU per Fixed-Line Customer Relationship..................................................	€	39.24		€	36.57
Switzerland Q2 Monthly ARPU per Fixed-Line Customer Relationship..........................	CHF 68.60		CHF 69.54
CEE Q2 Monthly ARPU per Fixed-Line Customer Relationship......................................	€	19.27		€	19.29
Customer Bundling
Fixed-mobileConvergence Switzerland.................................................................................		55.6%			21.6%
Fixed-mobileConvergence CEE..............................................................................................		6.3%			1.2%
Single-Play..................................................................................................................................		23.0%			29.3%
Double-Play.................................................................................................................................		32.7%			28.2%
Triple-Play....................................................................................................................................		44.3%			42.5%
Mobile Subscribers
Postpaid.......................................................................................................................................		2,165,600			245,400
Prepaid.........................................................................................................................................		464,600			-
Total Mobile subscribers........................................................................................................		2,630,200			245,400
Q2 Organic Postpaid net additions..........................................................................................		58,000			16,000
Q2 Organic Prepaid net additions............................................................................................		4,000			-
Total Organic Mobile net additions ......................................................................................		62,000			16,000
Q2 Monthly ARPU per Mobile Subscriber:
Including interconnect revenue...........................................................................................	€	30.18		€	29.74
Excluding interconnect revenue..........................................................................................	€	26.05		€	26.72

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