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Liberty Global Reports First Quarter 2013 ResultsENGLEWOOD, Colo. --(Business Wire)-- Liberty Global, Inc. ("Liberty Global," "LGI," or the "Company") (NASDAQ: LBTYA, LBTYB and LBTYK), today announces financial and operating results for the first quarter ended March 31, 2013 ("Q1 2013"). Highlights for Q1 2013 as compared to the same period for 2012 ("Q1 2012") (unless noted) include:
Liberty Global's President and CEO Mike Fries commented, "Our track record of strong operating and financial performance from 2012 continued into the first quarter of 2013. We delivered mid-single-digit rebased revenue and OCF growth of 6% and 4%, respectively, with both results comparing favorably to the prior year period. Fueled by the addition of 1.5 million RGUs and over 500,000 mobile subscriptions over the last twelve months, we posted our fifth consecutive quarter with rebased revenue growth of better than 5%, led by Belgium and Germany." "Innovation remains a core focus this year as we continue to invest in the development of new product offerings. We launched our Horizon TV platform in Switzerland in Q1, with Ireland and Germany to follow later this year. Through April, we had over 200,000 Horizon TV subscribers in the Netherlands and Switzerland. In addition, we have significantly increased our broadband speeds in markets like the Netherlands, where we have key bundles positioned with 100 Mbps and a top-tier bundle at 200 Mbps." "We remain on track to complete the acquisition of Virgin Media4 before the end of the second quarter. We recently received regulatory approval from the European Commission and both companies have scheduled their respective shareholder votes for early June to approve the transaction. With a combined customer base of 25 million and an aggregate reach of over 45 million homes passed, we are excited about our collective growth potential and we will remain focused on delivering superior value to customers and shareholders." "Year-to-date, we have been active in the capital markets, raising the necessary financing to fund the Virgin Media acquisition, as well as opportunistically refinancing roughly $5 billion of debt at the UPC Holding and Unitymedia KabelBW credit pools. Upon completion of the Virgin Media transaction, we expect to have more than sufficient liquidity to fulfill our $3.5 billion share buyback target over the ensuing two years." Subscriber Statistics At March 31, 2013, our 19.7 million unique customers received 35.2 million total services, an increase of over 5% (inclusive of acquisitions) in our RGU base since March 31, 2012. On a product level, our RGU base consisted of 18.2 million video, 9.5 million broadband internet and 7.5 million telephony subscriptions at quarter-end. Bundling remains an important driver of our subscriber growth, particularly sales of our triple-play product offerings, as over 30% of our customer base, or approximately 6.2 million customers, subscribed to triple-play packages at March 31, 2013. In total, we finished the first quarter with aggregate bundled customers of 9.3 million (or 47% of our total customer base), which reflects an increase of over 920,000 (inclusive of acquisitions) over the last twelve months. During Q1 2013, we added 373,000 RGUs as compared to 445,000 RGUs in Q1 2012. Geographically, our RGU additions in Central and Eastern Europe ("CEE") grew year-over-year by 30% to 70,000 and Latin America5 increased by 88% to 63,000, while western Europe6 experienced a decline of 33% to 240,000. The lower comparative western European result was directly attributable to our German and Dutch businesses, as each had their best quarterly subscriber performance of 2012 in the first quarter. With respect to Germany, we added 169,000 RGUs during Q1 2013 as compared to the record 219,000 we achieved in Q1 2012. A portion of this lower result is due to a housing association contract that we lost in Germany in December 2011, as approximately 16,000 of the impacted RGUs were transferred to the new provider during the quarter. With respect to our Dutch operation, we lost 3,000 RGUs in Q1 2013, as compared to a gain of 42,000 in Q1 2012. However, this result is consistent with our Dutch subscriber performance in both the third and fourth quarters of 2012, as the Dutch market remains very competitive. To that point and subsequent to quarter-end, we further strengthened our customer proposition in the Netherlands, as we introduced basic digital unencryption and launched new triple-play bundles that include increased broadband speeds with our primary bundle offering 100 Mbps along with the introduction of a 200 Mbps internet product in certain areas. In terms of broadband internet, we added 233,000 RGUs during the quarter with key contributions from our German, Swiss, Belgian and Chilean operations. In particular, our 22,000 Swiss broadband internet additions in Q1 2013 resulted partly from the market-leading speeds included in our recently launched Horizon bundles. From a voice perspective, we added 231,000 telephony subscribers in Q1 2013, largely mirroring our broadband growth, as we upsell our single- and double-play customer base to triple-play services. From a video standpoint, we lost 92,000 video subscribers during the quarter, broadly in line with the corresponding prior year period. Our Chilean, CEE and Belgian operations all improved their year-over-year video subscriber performance. A key development that has taken shape over the last six months is that we have introduced basic digital unencryption to promote the digitalization process and enhance our competitive position in a number of markets, including Switzerland, the Netherlands (as noted earlier), Austria, Romania, Czech Republic and in Germany's Unitymedia footprint. By unencrypting the digital signal, we are providing our customers with incremental value and an easy introduction to our basic digital video services. We continue to promote Horizon TV in the Dutch market and we launched this platform in January 2013 in Switzerland. Currently we have over 200,000 Horizon TV subscribers with more than 145,000 in the Netherlands and over 55,000 in Switzerland. In addition, we launched our unique Horizon Online platform with 45 channels in Ireland in mid-April and have plans to launch the full Horizon TV platform this summer in the Irish market, followed by Germany later in the year. Revenue For the three months ended March 31, 2013, our consolidated revenue increased 9% or $231 million to $2.77 billion, as compared to $2.54 billion in the prior year period. Our organic growth, led by volume growth in broadband internet and mobile, fueled the majority of our year-over-year top-line expansion. In addition, we also benefitted from the positive contribution of acquisitions, principally OneLink in Puerto Rico, and to a lesser extent, foreign exchange ("FX") movements. Adjusting for both the impact of acquisitions and FX, we achieved year-over-year rebased revenue growth of 6% in Q1 2013, our best first quarter result in six years. Our western European operations, which accounted for over 70% of our consolidated revenue in the quarter, achieved year-over-year rebased growth of 7%. This strong performance resulted largely from our Belgian and German operations, which delivered rebased growth of 12% and 10%, respectively. Our German result was particularly impressive given the fact that in the first quarter of 2013 we did not recognize revenue associated with public broadcaster carriage fees, which had contributed approximately $8 million of revenue in Q1 2012. Furthermore, within western Europe, our businesses in Ireland and Switzerland generated rebased revenue growth of 9% and 5%, respectively, as each benefitted from more than 100,000 advanced service RGU additions7 during the last twelve months. Our Swiss operation continued to demonstrate strong quarterly top-line growth, supported not only by volume growth but also by a video price increase in the quarter. Turning to CEE, our cable business in this region, which represents approximately 10% of our consolidated revenue, posted 1% rebased revenue growth for the three months ended March 31, 2013. Finally, moving beyond Europe, our Chilean business, aided by the positive contribution from mobile services, delivered 8% rebased revenue growth in Q1 2013. Operating Cash Flow As compared to the corresponding prior year period, total OCF increased 6% to $1.27 billion for the three months ended March 31, 2013. Our reported increase in OCF was largely due to continued organic growth, while acquisitions and FX movements played a smaller role. After adjusting for both acquisitions and FX, our year-over-year rebased OCF growth was 4%, with our Chilean, western European and CEE operations reporting rebased OCF growth of 10%, 6% and 1%, respectively. Our strong performance in western Europe was led by our operations in Ireland and Germany, which reported rebased OCF growth of 12% and 11%, respectively. With respect to our German business, it was our third consecutive quarter of double-digit rebased OCF growth, as we continue to generate strong revenue growth and streamline our cost structure in the region. In addition to our Irish and German businesses, our Belgian and Swiss operations generated rebased OCF growth of 4% in the quarter, while our Dutch operation reported flat rebased results, due largely to increased competition over the last three quarters. Within Europe, we also realized a $9 million year-over-year increase in costs in our central and other category resulting in part from our centralization and procurement initiatives. Our consolidated OCF margin8 for Q1 2013 was 45.9%, as compared to 47.1% for the corresponding prior year period. This 120 basis point decline was attributable in part to our Belgian operation, which experienced a 320 basis point decrease in year-over-year OCF margin to 46.2% in Q1 2013. This decrease was a result of higher handset and other subscriber acquisition costs associated with the rapid expansion of Telenet's mobile business. Excluding our Belgian operation, our remaining European distribution businesses posted a collective OCF margin of 51.4%, which was lower year-over-year by 30 basis points, as both our Western European and CEE operations achieved relatively flat year-over-year OCF margins of 56.1% and 48.9%, respectively. Operating Income For the three months ended March 31, 2013, our reported operating income increased by 6% to $525 million as compared to $494 million for the three months ended March 31, 2012. The year-over-year improvement was driven by our 9% increase in revenue and lower selling, general and administrative expenses and depreciation and amortization, each of which are measured as a percentage of revenue. These factors were partially offset by higher operating expenses measured as a percentage of revenue and increased expenses relating to impairment, restructuring and other operating items. Net Loss Attributable to LGI Stockholders We reported a net loss attributable to LGI stockholders ("Net Loss") of $1 million or nil per basic and diluted share for the three months ended March 31, 2013. This compares favorably to a Net Loss of $25 million or $0.09 per basic and diluted share for the same period last year. The year-over-year improvement in our Net Loss resulted from, among other factors, positive changes in the fair value adjustments associated with our derivative instruments and increased operating income, partially offset by increased losses from foreign currency transactions and debt modification and extinguishment, as well as higher interest expense. For the three months ended March 31, 2013 and 2012, our basic and diluted per share calculations utilized weighted average common shares of 257 million and 273 million, respectively. At April 30, 2013, we had 257 million shares outstanding. During the first quarter of 2013, we repurchased $169 million of our equity. Property and Equipment Additions, Capital Expenditures and Free Cash Flow Measured as a percentage of revenue, our property and equipment additions9 and capital expenditures10 declined for the three months ended March 31, 2013, as compared to the prior year period. We reported property and equipment additions of $536 million, which represented 19% of revenue for Q1 2013, as compared to $507 million or 20% of revenue for the corresponding prior year period. Our aggregate spend in the quarter was slightly weighted towards customer premises equipment, which accounted for 45% of our property and equipment additions as compared to 41% in Q1 2012. This was due in part to spend attributable to our Horizon TV roll-outs in the Netherlands and Switzerland. We remain focused on optimizing working capital and improving our capital efficiency. To that point, we continue to increase our use of non-cash vendor financing and capital lease arrangements, which were $57 million higher in Q1 2013 as compared to Q1 2012. These arrangements contributed to a reduction in our capital expenditures in Q1 2013, as we reported capital expenditures of $504 million or 18% of revenue, compared to $521 million or 21% of revenue for the corresponding prior year period. For the three months ended March 31, 2013, we reported Free Cash Flow ("FCF") of $23 million and Adjusted Free Cash Flow ("Adjusted FCF"),11 which excludes costs associated with our Chilean wireless project, of $68 million. This compares to FCF and Adjusted FCF of $242 million and $279 million, respectively, for the three months ended March 31, 2012. The lower FCF and Adjusted FCF in Q1 2013, as compared to the corresponding prior year period, was primarily attributable to a decrease of approximately $200 million or 26% in cash provided by the operating activities of our continuing operations, even though our OCF was higher by $74 million. The decrease was due primarily to the expected reversal of favorable working capital movements during the fourth quarter of 2012 and, to a lesser extent, higher cash outflow in the quarter relating to cash paid for interest expense. Vendor financing and capital lease arrangements provided a $22 million net benefit to the year-over-year comparison of our FCF and Adjusted FCF. In this regard, the positive impacts of vendor financing and capital lease arrangements on capital expenditures, as noted above, more than offset a $35 million increase in cash payments on the vendor financing and capital lease obligations that we had entered into last year. Leverage and Liquidity At March 31, 2013, we had total debt12 of $30.7 billion, including $3.6 billion relating to senior secured and senior notes (collectively, the "Lynx Bonds") that were issued in February 2013 by certain of our subsidiaries in connection with the announced Virgin Media acquisition. We intend to push down the Lynx Bonds to the Virgin Media level upon completion of the acquisition. Excluding the impact of the Lynx Bonds, our aggregate debt was down $0.4 billion as compared to our debt at December 31, 2012, resulting primarily from the translation impact associated with a strengthening U.S. dollar. Year-to-date, we have completed a number of opportunistic financing transactions at Unitymedia KabelBW and UPC Holding, our two primary credit pools. As a result of these transactions, we have refinanced total debt of approximately $5 billion at these two credit pools and in April, we raised incremental debt of approximately $450 million at Unitymedia KabelBW. Collectively, these transactions further extended our maturity schedule and lowered our consolidated borrowing rate. As of March 31, 2013 and adjusting for the aforementioned transactions that occurred subsequent to Q1, we estimate that approximately 90% of our total debt is due in 2017 and beyond, and that our fully-swapped borrowing cost13 is approximately 6.9%. In addition, we have made an opportunistic and strategic investment in publicly-traded Ziggo N.V. ("Ziggo"), the largest cable operator in the Netherlands. We have purchased 36.4 million shares of Ziggo for approximately €926 million ($1,187 million) and as a result, we own approximately 18.2% of the company based on shares outstanding at March 31, 2013. Of the shares purchased, we bought 25.3 million shares in March 2013 (which were settled in April 2013), and the remaining 11.1 million shares were purchased near the end of April. We intend to fund a significant portion of the aggregate investment through a limited recourse margin loan. In terms of our consolidated liquidity,14 we had reported cash and cash equivalents of $2.9 billion, including $1.6 billion at the parent level,15 at March 31, 2013. Including $2.2 billion in aggregate borrowing capacity, as represented by the maximum undrawn commitments under each of our credit facilities,16 we had consolidated liquidity of approximately $5.1 billion at March 31, 2013. This liquidity amount excludes $3.5 billion of cash attributable to the net proceeds from the Lynx Bonds that is held as restricted cash on our balance sheet. We ended Q1 2013 with reported gross and net leverage ratios17 of 6.0x and 4.8x, respectively. After excluding the $1.0 billion loan that is backed by the shares we hold in Sumitomo Corporation and the $3.6 billion of Lynx Bonds and related net proceeds in escrow accounts, our adjusted gross and net leverage ratios decline to 5.1x and 4.6x. These adjusted ratios are down modestly from our ratios at December 31, 2012. Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including our expectations with respect to our operating momentum and 2013 prospects, including our expectations for continued organic growth in subscribers, the penetration of our advanced services, and our ARPU per customer; our assessment of the strength of our balance sheet, our liquidity and access to capital markets, including our borrowing availability, potential uses of our excess capital, including for acquisitions and continued stock buybacks, our ability to continue to do opportunistic refinancings and debt maturity extensions and the adequacy of our currency and interest rate hedges; our expectations with respect to the timing and impact of our expanded roll-out of advanced products and services, including Horizon TV; our assessment of the impacts of the unencryption of our basic digital channels; our insight and expectations regarding competitive and economic factors in our markets, statements regarding the acquisition of Virgin Media, including the anticipated consequences and benefits of the acquisition and the targeted quarter in which we expect to close the transaction, the availability of accretive M&A opportunities and the impact of our M&A activity on our operations and financial performance and other information and statements that are not historical fact. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. These risks and uncertainties include the continued use by subscribers and potential subscribers of the Company's services and willingness to upgrade to our more advanced offerings, our ability to meet challenges from competition and economic factors, the continued growth in services for digital television at a reasonable cost, the effects of changes in technology, law and regulation, our ability to obtain regulatory approval and satisfy the conditions necessary to close acquisitions and dispositions, our ability to achieve expected operational efficiencies and economies of scale, our ability to generate expected revenue and operating cash flow, control property and equipment additions as measured by percentage of revenue, achieve assumed margins and control the phasing of our FCF, our ability to access cash of our subsidiaries and the impact of our future financial performance and market conditions generally, on the availability, terms and deployment of capital, fluctuations in currency exchange and interest rates, the continued creditworthiness of our counterparties, the ability of vendors and suppliers to timely meet delivery requirements, as well as other factors detailed from time to time in the Company's filings with the Securities and Exchange Commission including our most recently filed Forms 10-K/A and 10-Q. These forward-looking statements speak only as of the date of this release. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. About Liberty Global Liberty Global is the leading international cable company, with operations in 13 countries. We connect people to the digital world and enable them to discover and experience its endless possibilities. Our market-leading triple-play services are provided through next-generation networks and innovative technology platforms that connect 20 million customers subscribing to 35 million television, broadband internet and telephony services as of March 31, 2013. Liberty Global's consumer brands include UPC, Unitymedia, KabelBW, Telenet and VTR. Our operations also include Chellomedia, our content division, Liberty Global Business Services, our commercial division and Liberty Global Ventures, our investment fund. For more information, please visit www.lgi.com. _______________________________________
Revenue and Operating Cash Flow In the following tables, we present revenue and operating cash flow by reportable segment of our continuing operations for the three months ended March 31, 2013, as compared to the corresponding prior year period. All of our reportable segments derive their revenue primarily from broadband communications services, including video, broadband internet and telephony services. All of our reportable segments also provide business-to-business services. At March 31, 2013, our operating segments in the UPC/Unity Division provided broadband communications services in 10 European countries and DTH services to customers in the Czech Republic, Hungary, Romania and Slovakia through a Luxembourg-based organization that we refer to as "UPC DTH". Our Other Western Europe segment includes our broadband communications operating segments in Austria and Ireland. Our Central and Eastern Europe segment includes our broadband communications operating segments in the Czech Republic, Hungary, Poland, Romania and Slovakia. The UPC/Unity Division's central and other category includes (i) the UPC DTH operating segment, (ii) costs associated with certain centralized functions, including billing systems, network operations, technology, marketing, facilities, finance and other administrative functions and (iii) intersegment eliminations within the UPC/Unity Division. Telenet provides video, broadband internet and telephony services in Belgium. In Chile, the VTR Group includes VTR, which provides video, broadband internet and telephony services, and VTR Wireless, which provides mobile services through a combination of its own wireless network and certain third-party wireless access arrangements. Our corporate and other category includes (i) less significant consolidated operating segments that provide (a) broadband communications services in Puerto Rico and (b) programming and other services primarily in Europe and Latin America and (ii) our corporate category. Intersegment eliminations primarily represent the elimination of intercompany transactions between our broadband communications and programming operations, primarily in Europe. For purposes of calculating rebased growth rates on a comparable basis for all businesses that we owned during 2013, we have adjusted our historical revenue and OCF for the three months ended March 31, 2012 to (i) include the pre-acquisition revenue and OCF of certain entities acquired during 2012 and 2013 in our rebased amounts for the three months ended March 31, 2012 to the same extent that the revenue and OCF of such entities are included in our results for the three months ended March 31, 2013 and (ii) reflect the translation of our rebased amounts for the three months ended March 31, 2012 at the applicable average foreign currency exchange rates that were used to translate our results for the three months ended March 31, 2013. The acquired entities that have been included in whole or in part in the determination of our rebased revenue and OCF for the three months ended March 31, 2012 include OneLink and five small entities. We have reflected the revenue and OCF of the acquired entities in our 2012 rebased amounts based on what we believe to be the most reliable information that is currently available to us (generally pre-acquisition financial statements), as adjusted for the estimated effects of (i) any significant differences between GAAP and local generally accepted accounting principles, (ii) any significant effects of acquisition accounting adjustments, (iii) any significant differences between our accounting policies and those of the acquired entities and (iv) other items we deem appropriate. We do not adjust pre-acquisition periods to eliminate non-recurring items or to give retroactive effect to any changes in estimates that might be implemented during post-acquisition periods. As we did not own or operate the acquired businesses during the pre-acquisition periods, no assurance can be given that we have identified all adjustments necessary to present the revenue and OCF of these entities on a basis that is comparable to the corresponding post-acquisition amounts that are included in our historical results or that the pre-acquisition financial statements we have relied upon do not contain undetected errors. The adjustments reflected in our rebased amounts have not been prepared with a view towards complying with Article 11 of Regulation S-X. In addition, the rebased growth percentages are not necessarily indicative of the revenue and OCF that would have occurred if these transactions had occurred on the dates assumed for purposes of calculating our rebased amounts or the revenue and OCF that will occur in the future. The rebased growth percentages have been presented as a basis for assessing growth rates on a comparable basis, and are not presented as a measure of our pro forma financial performance. Therefore, we believe our rebased data is not a non-GAAP financial measure as contemplated by Regulation G or Item 10 of Regulation S-K. In each case, the following tables present (i) the amounts reported by each of our reportable segments for the comparative periods, (ii) the U.S. dollar change and percentage change from period to period and (iii) the percentage change from period to period on a rebased basis:
N.M. - Not Meaningful * - Omitted _______________________________________
Operating Cash Flow Definition and Reconciliation Operating cash flow is the primary measure used by our chief operating decision maker to evaluate segment operating performance. Operating cash flow is also a key factor that is used by our internal decision makers to (i) determine how to allocate resources to segments and (ii) evaluate the effectiveness of our management for purposes of annual and other incentive compensation plans. As we use the term, operating cash flow is defined as revenue less operating and selling, general and administrative expenses (excluding stock-based compensation, depreciation and amortization, provisions for litigation and impairment, restructuring and other operating items). Other operating items include (i) gains and losses on the disposition of long-lived assets, (ii) direct acquisition costs, such as third-party due diligence, legal and advisory costs, and (iii) other acquisition-related items, such as gains and losses on the settlement of contingent consideration. Our internal decision makers believe operating cash flow is a meaningful measure and is superior to available GAAP measures because it represents a transparent view of our recurring operating performance that is unaffected by our capital structure and allows management to (i) readily view operating trends, (ii) perform analytical comparisons and benchmarking between segments and (iii) identify strategies to improve operating performance in the different countries in which we operate. We believe our operating cash flow measure is useful to investors because it is one of the bases for comparing our performance with the performance of other companies in the same or similar industries, although our measure may not be directly comparable to similar measures used by other public companies. Operating cash flow should be viewed as a measure of operating performance that is a supplement to, and not a substitute for, operating income, net earnings (loss), cash flow from operating activities and other GAAP measures of income or cash flows. A reconciliation of total segment operating cash flow to our operating income is presented below.
Summary of Debt, Capital Lease Obligations and Cash and Cash Equivalents The following table2 details the U.S. dollar equivalent balances of our third-party consolidated debt, capital lease obligations and cash and cash equivalents at March 31, 2013:
Property and Equipment Additions and Capital Expenditures The table below highlights the categories of our property and equipment additions for the indicated periods and reconciles those additions to the capital expenditures that we present in our condensed consolidated statements of cash flows:
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Free Cash Flow and Adjusted Free Cash Flow Definition and Reconciliation We define free cash flow as net cash provided by our operating activities, plus (i) excess tax benefits related to the exercise of stock incentive awards and (ii) cash payments for direct acquisition costs, less (a) capital expenditures, as reported in our consolidated cash flow statements, (b) principal payments on vendor financing obligations and (c) principal payments on capital leases (exclusive of the portions of the network lease in Belgium and the duct leases in Germany that we assumed in connection with certain acquisitions), with each item excluding any cash provided or used by our discontinued operation. We also present Adjusted FCF, which adjusts FCF to eliminate the incremental FCF deficit associated with the VTR Wireless mobile initiative. We believe that our presentation of free cash flow provides useful information to our investors because this measure can be used to gauge our ability to service debt and fund new investment opportunities. Free cash flow should not be understood to represent our ability to fund discretionary amounts, as we have various mandatory and contractual obligations, including debt repayments, which are not deducted to arrive at this amount. Investors should view free cash flow as a supplement to, and not a substitute for, GAAP measures of liquidity included in our consolidated cash flow statements. The following table provides the reconciliation of our continuing operations' net cash provided by operating activities to FCF and Adjusted FCF for the indicated periods:
ARPU per Customer Relationship The following table provides ARPU per customer relationship8 for the indicated periods:
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RGUs, Customers and Bundling The following table provides information on the breakdown of our RGUs and customer base and highlights our customer bundling metrics at March 31, 2013, December 31, 2012 and March 31, 2012:
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Additional General Notes to Tables: All of our broadband communications subsidiaries provide telephony, broadband internet, data, video or other business-to-business ("B2B") services. Certain of our B2B revenue is derived from small or home office ("SOHO") subscribers that pay a premium price to receive enhanced service levels along with video, internet 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." With the exception of our B2B SOHO subscribers, we generally do not count customers of B2B services as customers or RGUs for external reporting purposes. Certain of our residential and commercial RGUs are counted on an EBU basis, including residential multiple dwelling units and commercial establishments, such as bars, hotels and hospitals, in Chile and Puerto Rico and certain commercial establishments in Europe (with the exception of Germany and Belgium, where we do not count any RGUs on an EBU basis). Our EBUs are generally calculated by dividing the bulk price charged to accounts in an area by the most prevalent price charged to non-bulk residential customers in that market for the comparable tier of service. As such, we may experience variances in our EBU counts solely as a result of changes in rates. In Germany, homes passed reflect the footprint, and two-way homes passed and internet and telephony homes serviceable reflect the technological capability, of our network up to the street cabinet, with drops from the street cabinet to the building generally added, and in-home wiring generally upgraded, on an as needed or success-based basis. In Belgium, Telenet leases a portion of its network under a long-term capital lease arrangement. These tables include operating statistics for Telenet's owned and leased networks. 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) bad debt collection experience 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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