Liberty Global Reports Second Quarter 2018 Results
DENVER, Colorado--(BUSINESS WIRE)--Aug 8, 2018--Liberty Global plc today announced its three months (“Q2”) and six months (“YTD” or “H1”) 2018 financial results. Our operations in Germany, Austria, Hungary, Romania and the Czech Republic (collectively, the “Discontinued European Operations”) and the former LiLAC Group have been accounted for as discontinued operations. Unless otherwise indicated, the information in this release relates only to our continuing operations. As used in this release, the term “Full Company” includes our continuing operations and the Discontinued European Operations. For additional information, including the reasons that we present selected information on a Full Company basis, see note 1. In addition, on January 1, 2018, we adopted new revenue recognition rules on a prospective basis and a new presentation of certain components of our pension expense on a retrospective basis. All information in this release is presented on a comparable basis with respect to both of these accounting changes. For additional information concerning our discontinued operations and these accounting changes, see notes 2 and 3.
CEO Mike Fries stated, “Our second quarter results were underpinned by continued momentum at Virgin Media, which generated record Q2 rebased 4 revenue and subscriber growth, delivering a 4.1% top-line increase while adding 112,000 net RGU additions. Enhanced broadband speeds and the continued roll out of our V6 set top box helped deliver a substantial increase in our triple-play acquisitions, improved growth on our existing footprint and increased ARPU. Our other operations delivered mixed results, with Germany achieving a solid performance, offset by challenging competitive markets in Switzerland and Belgium.
“We recently announced several management changes that highlight our commitment to putting the best and brightest in critical positions. Enrique Rodriguez was named our Chief Technology Officer. Enrique brings a wealth of C-level experience to the table and we’re excited to tap his deep industry and technical knowledge. At Virgin Media, we announced the appointment of Lutz Schüler as Chief Operating Officer. Over the past eight years, Lutz has guided Unitymedia in Germany to unprecedented success, and we couldn’t be happier to keep him in the Liberty family. Finally, we announced the appointments of Severina Pascu as CEO of UPC Switzerland and Eric Tveter as Chairman of our Swiss business and CEO of our operations in Eastern Europe.
Last week, we announced the closing of the sale of UPC Austria for over $2 billion or ~11x OCF, generating net proceeds of approximately $1.1 billion after taking into account the repayment of debt that we attribute to UPC Austria. These net proceeds will be used to increase our share repurchase program by $500 million and to repay additional debt across select credit pools of Liberty Global. With respect to the Vodafone deal announced back in May, we continue to target a mid-2019 closing.
At June 30, 2018, our continuing operations had an average debt tenor 6 of more than seven years, a fully-swapped borrowing cost of 4.0% and a liquidity 7 position in excess of $3 billion. During Q2 we significantly ramped our share repurchase activity and bought back nearly $800 million of stock.”
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 and offer WiFi service through 12 million 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, Casa Systems, LionsGate, the Formula E racing series and several regional sports networks.
* The figures included in this paragraph include both our continuing and discontinued operations, adjusted for our July 31, 2018 sale of UPC Austria
YTD and Q2 Highlights ( on a continuing operations basis unless otherwise noted )YTD and Q2 rebased revenue up 2.7% in each period Q2 residential cable revenue 8 of $2.0 billion decreased 1.8% year-over-yearQ2 residential mobile revenue 8 increased 7.1% year-over-year to $0.4 billionQ2 B2B 9 revenue 8 increased 8.0% year-over-year to $0.5 billion YTD operating income decreased 6.7% year-over-year Q2 operating income grew 31.0% year-over-year YTD rebased OCF growth was 2.8% to $2.6 billion, including 3.3% growth in Q2 YTD results supported by strong performances in Belgium and Virgin Media RGU additions of 17,000 in H1 2018, including 43,000 in Q2 Built over 150,000 new premises in Q2 Virgin Media delivered 118,000 10 new premises in the U.K. & Ireland Solid balance sheet with $3.5 billion of liquidity before considering the net proceeds received from our disposition of UPC Austria Net leverage 11 of 4.9x for the Full Company Fully-swapped borrowing cost of 4.0% Completed sale of UPC Austria to T-Mobile Austria in July
Subscriber GrowthCable Product Performance: During Q2 we added 43,000 RGUs, a 14.4% improvement over the prior-year period, mainly driven by improved volumes in all regions except for Switzerland. On the fixed product side, data showed a year-over-year decrease, while video adds were largely in-line. Telephony net adds increased year-over-year U.K./Ireland: Record Q2 RGU additions of 112,000 were higher than the prior year, with a larger contribution from both new build areas and our existing footprint. This was driven by our core offers in the U.K. focused on triple-play bundles, which included a doubling of broadband speeds combined with our cutting-edge V6 set-top box Belgium: RGU attrition of 8,000 in Q2 was primarily due to continued intensified competition. Our converged quad-play package additions continued to grow, as we gained 18,000 new “WIGO” subscribers during Q2 Switzerland: Lost 54,000 RGUs in Q2, compared to a gain of 6,000 in Q2 2017, primarily due to heightened competition Continuing CEE (Poland, Slovakia and DTH): Lost 7,000 RGUs in Q2, as compared to a loss of 31,000 in the prior-year period Next-Generation Video Penetration (including Horizon TV, Horizon-Lite, TiVo, Virgin TV V6 and Yelo TV): Added 158,000 subscribers to our advanced platforms in Q2 and reached 6.7 million or 77% of our total cable video base (excluding DTH) by the end of the quarter WiFi Connect Box: Deployments of our latest WiFi Connect box increased by over 360,000 in Q2, ending the quarter with an installed base of nearly 5.1 million or 55% of broadband subscribers across our continuing operations Mobile: Added 54,000 mobile subscribers in Q2, as 91,000 postpaid additions were partially offset by continued attrition in our low-ARPU prepaid base Belgium added 29,000 mobile subscribers during Q2, a strong year-over-year improvement, as the prior-year period was negatively impacted by the regulated prepaid registration process and its related churnU.K./Ireland added 21,000 mobile subscribers in Q2 as postpaid growth was partially offset by low-ARPU prepaid losses. The penetration of 4G at Virgin Media increased to 68% of our postpaid base at the end of Q2 and 36% of our U.K. mobile base has been migrated to our full MVNO platform, which went live in Q4 2017Switzerland mobile subscriber additions were in-line year-over-year with 8,000 mobile subscriber additions in Q2, driven by continued penetration of mobile in the fixed customer base
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:
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