Liberty Global Reports Q3 2021 Results

Strong demand for connectivity driving sustained volume growth, added 266k¹ aggregate broadband and postpaid mobile subscribers in Q3

New FMC portfolios launched in the UK and Switzerland; integration and synergy plans in both markets progressing well

Network strategies steadily advancing with over 80% of fixed footprint actively marketing 1 Gbps broadband, new network plans announced in Belgium and Ireland

Upgrading FY’21 Full Company² Adjusted Free Cash Flow guidance

On track for full-year share repurchases of $1.4 billion

DENVER, Colorado–(BUSINESS WIRE)–Liberty Global plc today announced its Q3 2021 financial results. Effective with the release of our third quarter earnings we have stopped using the term Operating Free Cash Flow (“OFCF”) and now use the term “Adjusted EBITDA less P&E Additions”. As we define the term, Adjusted EBITDA less P&E Additions has the same meaning as OFCF had previously, and therefore does not impact any previously reported amounts.

CEO Mike Fries stated, “Q3 marked the first full quarter of operations for all four of our converged national champions, as we continue demonstrating strong commercial momentum across the group. Operationally, we added 266,000¹ aggregate broadband and postpaid mobile subscribers during the quarter driven by continued execution of our convergence strategies. In the UK and Switzerland, we remain on track with our integration and synergy plans, while recently introducing new FMC portfolios at both Virgin Media O2 and Sunrise UPC. Virgin Media O2’s VOLT campaign builds on its rapidly growing gigabit-ready footprint and 5G coverage across the UK. In Switzerland, our new Sunrise We bundles allow customers to benefit from the best broadband connectivity in the market and a completely new Sunrise TV service.

During the quarter we continued advancing our network development strategies in all of our operations. In the UK, Virgin Media O2 increased its 1Gbps footprint by 75% to reach nearly 13 million UK homes, while FTTP upgrade pilots are underway as part of its plan to deploy a full fiber overlay across the entire HFC network by 2028. Meanwhile in Belgium, Telenet recently announced the intention to create a new, self-funding NetCo with utility company Fluvius that will own the “data network of the future” in Flanders. And in Ireland, we are announcing plans today to upgrade our fixed HFC network with a low-cost FTTH overlay during the next three years – a project requiring less than €100 million of new equity.

We also continued making solid progress in terms of our Ventures investments and running our levered equity strategy for value creation. We reached a definitive agreement to sell UPC Poland for a total enterprise value of PLN 7.0 billion ($1.8 billion³). The sale price represents a multiple of approximately 9x UPC Poland’s estimated 2021 Adjusted EBITDA⁴⁽ⁱ⁾, and nearly 20x its estimated 2021 Adjusted EBITDA less P&E Additions⁵. Net cash proceeds to Liberty Global are expected to be ~$600 million and the transaction is expected to close in H1’22.

Our Ventures portfolio, valued at $3.1 billion⁶, is becoming too big to ignore with focused investment strategies around technology, content and infrastructure – in markets and services directly adjacent to our core FMC operations. In Q3 we formed a joint venture with DigitalBridge called AtlasEdge to serve the growing European demand for scalable data center capacity that brings applications and content closer to the edge. We continue to benefit from some of our early-stage venture capital deals as well, such as Plume which operates one of the largest Software Defined Networks (SDN) in the world, offering an AI-driven, cloud-based platform for managing the customer experience on home and small business WiFi networks. Plume recently announced the closing of a $300 million Series F round that raised the company’s disclosed valuation to $2.6 billion, adding significant value to our ownership stake.

At the consolidated level, we are increasing our full-year guidance for Full Company Adjusted Free Cash Flow⁽ⁱⁱ⁾ to $1.45 billion, representing 36% YoY growth. This is supported by Virgin Media O2’s distributions guidance to shareholders of at least £300 million for FY’21 and VodafoneZiggo has refined its FY’21 shareholder distributions target to a minimum of €600 million⁽ⁱⁱⁱ⁾. Liberty Global’s balance sheet remains in great shape with $4.3 billion^(iv) of cash (pro forma for ~$600 million of net cash proceeds expected from the sale of UPC Poland) and $5.9 billion of total liquidity⁷ (pro forma for UPC Poland), and we continue to be aggressive buyers of our stock, having repurchased ~$1.1 billion through the end of October against our full-year repurchase commitment of $1.4 billion. And we look forward to executing on the commitment to repurchase 10% of our shares outstanding in both 2022 and 2023.”

Q3 Operating Company Highlights

Sunrise UPC (Consolidated)

“Sunrise We” fully converged bundles launched; Sunrise UPC performing well in competitive market

Operating highlights: Sunrise UPC continues to execute its strategic plan towards becoming a national converged champion. Continued sales momentum on fixed combined with stable low churn resulted in 5,000 broadband additions in Q3. Demand for mobile postpaid remains strong with 43,000 net adds across all brands due in part to a relief in COVID travel restrictions. With the expanded Sunrise We portfolio, Sunrise customers are now benefiting for the first time from the combined Sunrise UPC network, our new TV platform and more attractive converged bundles for residential and business customers.

Financial highlights: Reported revenue was $830.2 million in Q3 2021, flat on a rebased⁸ basis YoY primarily due to the net effect of (i) higher mobile revenue driven by an increase in subscribers, (ii) lower revenue from handset sales and (iii) a decrease in fixed subscription revenue due to lower voice and video revenues. Swiss reported Adjusted EBITDA was $330.8 million in Q3 2021. On a rebased basis, Adjusted EBITDA increased 3.3%, including $3 million of costs to capture⁹. Adjusted EBITDA less P&E Additions was $195.9 million in Q3 on a reported basis. On a rebased basis, Adjusted EBITDA less P&E Additions increased 13.1% YoY, including the adverse impact of $27 million of costs to capture.

Telenet (Consolidated)

Solid operational and financial results in Q3 2021

Operating highlights: Commercial traction continued in Q3 2021, including a strong uptake of net new FMC customers driven by Telenet’s new “ONE(Up)” bundles. Telenet entered into a non-binding term sheet with Fluvius with the aim of evolving their joint fixed network infrastructure in Flanders to “the data network of the future”. To this end, Telenet and Fluvius will create together a new self-funding independent infrastructure company (“NetCo”) that will run an open access network, contributing both existing HFC and fiber assets as well as developing new build fiber assets in the future. NetCo is expected to enjoy a high network utilization rate from the start driven by Telenet’s existing customer relationships and the incremental traffic generated by wholesale partners. It is intended to be a multiparty partnership, and will be open to further partnering with strategic and/or financial parties. Telenet also commenced a strategic review of its telecommunications tower business to potentially enhance shareholder value.

Financial highlights: Reported and rebased revenue increased 1.2% and 0.4%, respectively, YoY to $755.4 million in Q3 driven by (i) an increase in wholesale revenue due to higher data usage, (ii) higher broadband revenue driven by customer growth and (iii) higher broadcasting revenue. Reported and rebased Adjusted EBITDA increased 0.5% and decreased 0.4%, respectively, YoY to $369.1 million in Q3, reflecting a difficult comparison against the same period last year and seasonality in some of our operating expenses. Reported and rebased Adjusted EBITDA less P&E Additions decreased 3.4% and 4.2%, respectively, to $235.8 million in Q3.

Virgin Media O2 (Non-consolidated Joint Venture)

Virgin Media O2 challenges the market as it launches first joint bundles, expands gigabit footprint and drives revenue growth

Operating highlights: First converged product, VOLT, went live in the market just four months after company formed. Contract mobile net adds were 108,000 in Q3. Q3 broadband net adds were 42,000 reflecting the continued demand for faster broadband speeds, with a sixth consecutive quarter of growth in both Project Lightning areas and the existing footprint. The average speed across the company’s broadband base was 202Mbps at the end of Q3, fully 4x the national average of 50Mbps. The company’s gigabit footprint now reaches 12.8 million premises and is on track to provide network-wide coverage of its 1.1Gbps speeds by the end of 2021. Supported thousands of businesses through the pandemic with SOHO customer base up 38% YoY.

Financial highlights (in US GAAP): Revenue increased 0.8% YoY on an FX neutral pro forma basis¹⁰ to $3,614.0 million in Q3, primarily driven by an increase in handset revenue fueled by increased upgrade activity following new hardware launches from Samsung and Apple, offset by lower service revenue due to the continued impact of a change in the distribution channel mix. Adjusted EBITDA decreased 0.4% YoY on an FX neutral pro forma basis to $1,180.3 million, including $15 million of opex costs to capture, primarily due to a change in the revenue mix and increased investment in future growth drivers of digitalization, product development, and increased sales and marketing expenses ahead of the peak Q4 trading period as well as higher programming costs. Adjusted EBITDA less P&E Additions decreased 14.3% YoY on an FX neutral pro forma basis to $507.8 million in Q3, including $28 million of opex and capex costs to capture, while investing in capital projects to deliver future growth.

For more information regarding Virgin Media O2 including full IFRS disclosures, please visit their investor relations page to access the JV’s Q3 earnings release.

VodafoneZiggo (Non-consolidated Joint Venture)

Sustained Financial Momentum; Full Year Guidance Updated

Operating highlights: Added 67,000 mobile postpaid subscribers, bringing the YTD total to 183,000 net additions. Added 9,000 converged households, driving improvements in Net Promoter Scores (NPS) and churn. VodafoneZiggo plans to deploy ~1 million SmartWiFi Plume pods across its customer base by year end in order to optimize their connectivity experience. Over 60% of connected households are now upgraded to 1 Gbps internet speeds, including over 1 million customers in the third quarter.

Financial highlights: Revenue grew 3.4% on a reported basis and 1.8% on a rebased basis YoY to $1,206.1 million, marking the tenth consecutive quarter of top-line growth, primarily driven by an increase in mobile customers, roaming and visitor recovery, and fixed ARPU growth. Reported and rebased Adjusted EBITDA increased 3.4% and 2.4%, respectively, YoY to $578.1 million, primarily driven by the aforementioned strong revenue growth. Adjusted EBITDA less P&E Additions increased 10.8% on a reported basis and 9.1% on a rebased basis YoY to $383.5 million, driven by lower property and equipment spend and Adjusted EBITDA growth. 2021 shareholder distribution guidance updated to over €600 million.

Q3 Ventures/ESG Highlights

Ventures

Our Ventures portfolio is becoming an increasingly important part of our overall value creation strategy as we continue to invest in businesses that have products or services we can use as a customer or as we create opportunities in adjacencies that leverage our existing infrastructure. These investments are strategic, aligned to our business and have the potential to create incremental liquidity and value for us over the long run.

Our AtlasEdge joint venture with DigitalBridge, a leading global investment firm dedicated to digital infrastructure, closed during Q3. AtlasEdge will deliver connectivity services through an extensive network of facilities located close to consumer and enterprise end users at the “edge” of the network. The company aims to serve the growing demand from cloud providers, streaming services and enterprises for high-performance, scalable and secure facilities through which they can distribute low-latency applications and services such as 5G, gaming, IOT and edge computing.

Plume recently announced that it closed $300 million in a new round of minority equity investment led by SoftBank Vision Fund 2, adding significant value to our ownership stake. This financing brought the company’s disclosed valuation to $2.6 billion, and will drive continued research and development, sales and marketing, partnerships, and acquisitions. According to Plume, in the last two quarters since its prior funding round, the company added more than 13 million new households for a total of 35+ million locations globally, over 350 million new managed devices to its global cloud platform, and acquired more than 60 new Communications Service Provider (CSP) customers.

Environmental, Social and Governance (ESG)

Liberty Global continues its commitment to enhancing sustainability and energy efficiency, with a focus on energy use, carbon emissions and management of electronic waste. Today, we are committing to Net Zero targets across Scopes 1 and 2, meaning we will eliminate the greenhouse gases we produce both directly and indirectly across our business by 2030. Further, we are in the final stages of our analysis and alignment planning to include Scope 3 within our Net Zero commitment, removing indirect emissions produced across our entire value chain. We anticipate we will confirm this ambition mid-2022.

Over the last year, our sustainability efforts have positioned us a leader within our industry. Liberty Global is a founding member of the European Green Digital Coalition, announced earlier this year. We were among the first 500 companies worldwide to develop approved Science-based Targets to reduce carbon emissions in alignment with the 2015 Paris Agreement, and our environmental initiatives and focus on carbon emissions garnered an A- score by the Carbon Disclosure Project (CDP).

Additionally, Diversity, Equity and Inclusion (DE&I) continues to be a focus for us, reinforcing an inclusive work environment, where our people know their voices are heard, valued, respected and everyone feels they belong. During the quarter, we announced our new Chief DE&I Officer, Soraya Loerts, who will help steer and deliver our DE&I agenda and vision, co-created by our dedicated DE&I Council. In its second year, the Council’s agenda is accelerating across its priorities of Gender, LGBTQIA+, Ability, Race and Ethnicity, and Multigenerational inclusivity and representation in the workplace.

Liberty Global Consolidated Q3 Highlights

• Q3 revenue decreased 33.2% YoY on a reported basis and increased 0.7% on a rebased basis to $1,901.4 million
• Q3 earnings (loss) from continuing operations increased 132.0% YoY on a reported basis to $315.6 million
• Q3 Adjusted EBITDA decreased 34.8% YoY on a reported basis and increased 1.0% on a rebased basis to $758.5 million
• Q3 property & equipment additions were 19.1% of revenue, as compared to 22.1% in Q3 2020
• Balance sheet with $5.3 billion of total liquidity
  • Comprised of $0.8 billion of cash, $2.9 billion of investments held under SMAs and $1.6 billion of unused borrowing capacity¹¹
• Fully-swapped borrowing cost of 3.5% on a debt balance of $15.2 billion for the Full Company

Customer Growth

Earnings (Loss) from Continuing Operations

• Earnings (loss) from continuing operations were $315.6 million and ($985.6 million) for the three months ended September 30, 2021 and 2020, respectively, and $12,889.2 million and ($502.2 million) for the nine months ended September 30, 2021 and 2020, respectively

Financial Highlights

The following tables present (i) revenue, Adjusted EBITDA^(*) and Adjusted EBITDA less P&E Additions for each of our reportable segments, including the non-consolidated VMED O2 JV and VodafoneZiggo JV, for the comparative periods and (ii) the percentage change from period to period on both a reported and rebased basis.

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Contacts

Investor Relations
Michael Bishop +44 20 8483 6246

Steve Carroll +1 303 784 4505

Amy Ocen +1 303 784 4528

Michael Khehra +44 78 9005 0979

Corporate Communications
Molly Bruce +1 303 220 4202

Matt Beake +44 20 8483 6428

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