Acquisitions, Disposals and Discontinued Operations

3 Months Ended

Mar. 31, 2018

Acquisitions, Disposals and Discontinued Operations [Abstract]

Acquisitions, Disposals and Discontinued Operations

2017 Acquisitions

SFR BeLux. On June 19, 2017, Telenet acquired Coditel Brabant sprl, operating under the SFR brand (SFR BeLux), for a cash and debt free purchase price of €369.0 million ($410.3 million at the applicable rates) (the SFR BeLux Acquisition) after post-closing adjustments. SFR BeLux provides cable services to households and businesses in Belgium (Brussels and Wallonia regions) and Luxembourg and offers mobile services in Belgium through a mobile virtual network operator (MVNO) agreement with Telenet Group BVBA (BASE).

Pending Disposal

On December 22, 2017, we reached an agreement to sell our Austrian operations, “UPC Austria,” to a third party for a total enterprise value of approximately €1.9 billion ($2.3 billion), subject to customary debt and working capital adjustments at completion. Closing of the transaction is subject to regulatory approval, which is not expected until the second half of 2018. The proceeds from the sale are expected to be used for general corporate purposes, which may include leverage reduction for the remaining UPC Holding borrowing group, re-investment into our business and support for our share repurchase program. In our segment presentation, UPC Austria is included in our Switzerland/Austria segment.

In addition, we have agreed to provide certain transitional services for a period of up to four years. These services principally comprise network and information technology-related functions. The annual charges will depend on the actual level of services required by the purchaser. Liberty Global will also allow the use of the UPC brand for a transitional period of up to three years as part of the transaction.

Effective with the signing of the agreement, we began accounting for UPC Austria as held for sale. Accordingly, we no longer depreciate or amortize the long-lived assets of UPC Austria. Long-lived assets classified as held for sale are measured at the lower of carrying amount or fair value less cost to sell. Since the aggregate carrying value of UPC Austria is less than the estimated fair value less cost to sell, no adjustment to the carrying value was necessary. The carrying amounts of UPC Austria’s major classes of assets and liabilities, which are are classified as held for sale, are summarized below:



	March 31, 2018		December 31, 2017
	in millions
Assets:
Current assets other than cash	$	33.3	$	29.2
Property and equipment, net	494.0		451.9
Goodwill	748.5		732.2
Other assets, net	3.4		3.2
Total assets	$	1,279.2	$	1,216.5

Liabilities:
Current portion of debt and capital lease obligations	$	0.8	$	0.8
Other accrued and current liabilities	97.1		77.7
Other long-term liabilities	85.8		77.8
Total liabilities	$	183.7	$	156.3

Our condensed consolidated statements of operations include aggregate earnings before income taxes attributable to UPC Austria of $55.5 million and $30.2 million during the three months ended March 31, 2018 and 2017, respectively, and aggregate earnings before income taxes attributable to Liberty Global shareholders of $53.2 million and $28.5 million, respectively.

Discontinued Operations

On December 29, 2017, in order to effect the split-off of the LiLAC Group (the Split-off Transaction), we distributed 100% of the common shares (the Distribution) of Liberty Latin America Ltd. (Liberty Latin America) to the holders of our then outstanding LiLAC Class A, Class B and Class C ordinary shares (collectively, the LiLAC Shares). Just prior to the completion of the Split-off Transaction, all of the businesses, assets and liabilities of the LiLAC Group were transferred to Liberty Latin America, which was then a wholly-owned subsidiary of Liberty Global. Following the Distribution, the LiLAC Shares were redesignated as deferred shares (with virtually no economic rights) and Liberty Latin America became an independent publicly-traded company that is no longer consolidated by Liberty Global. Accordingly, the entities comprising the LiLAC Group are reflected as discontinued operations in our condensed consolidated statements of operations and cash flows for the three months ended March 31, 2017. No gain or loss was recognized in connection with the Split-off Transaction.

In connection with the Split-off Transaction, we entered into several agreements that govern certain transactions and other matters between our company and Liberty Latin America (the Split-off Agreements). During the three months ended March 31, 2018, the impacts of the Split-off Agreements and other normal recurring transactions between our company and Liberty Latin America were not material.

The operating results of the LiLAC Group for the three months ended March 31, 2017, which are classified as discontinued operations in our condensed consolidated statement of operations, are summarized in the following table (in millions, except share and per share amount). These amounts exclude the LiLAC Group’s intercompany revenue and expenses that are eliminated within our condensed consolidated statement of operations.



Revenue	$	910.9
Operating income	$	134.8
Earnings before income taxes and noncontrolling interests	$	33.7
Income tax expense	$	(44.6	)
Net earnings attributable to noncontrolling interests	$	(16.4	)
Loss from discontinued operations attributable to Liberty Global shareholders, net of taxes	$	(27.3	)
Basic and diluted loss from discontinued operations attributable to Liberty Global shareholders per LiLAC Share	$	(0.16	)

Weighted average ordinary shares outstanding - basic and diluted	172,743,854

We reported a loss from discontinued operations attributable to Liberty Global shareholders during the three months ended March 31, 2017. Therefore, the potentially dilutive effect of certain share-based incentive awards with respect to LiLAC Shares was not included in the computation of diluted loss from discontinued operations attributable to Liberty Global shareholders per LiLAC Share because their inclusion would have been anti-dilutive to the computation or, in the case of certain performance-based restricted share units (PSUs), because such awards had not yet met the applicable performance criteria.

Other

Multimedia. On October 18, 2016, our subsidiary UPC Polska SP Z.o.o. (UPC Poland) entered into a definitive agreement to acquire the cable business of Multimedia Polska S.A. (Multimedia), the third-largest cable operator in Poland. On October 18, 2017, the Polish regulator issued a statement of objection against the proposed transaction on the basis that such transaction could restrict competition in a number of cities across the country. On March 23, 2018, UPC Poland withdrew its application for regulatory clearance to acquire Multimedia after failing to agree to revised commercial terms with the sellers that take into account current regulatory and market conditions. In addition, the agreement to acquire Multimedia has been terminated.