Segment Reporting

9 Months Ended

Sep. 30, 2020

Segment Reporting, Measurement Disclosures [Abstract]

Segment Reporting

Segment Reporting

We generally identify our reportable segments as (i) those consolidated subsidiaries that represent 10% or more of our revenue, Adjusted EBITDA (as defined below and as previously referred to as “Adjusted OIBDA”) or total assets or (ii) those equity method affiliates where our investment or share of revenue or Adjusted EBITDA represents 10% or more of our total assets, revenue or Adjusted EBITDA, respectively. In certain cases, we may elect to include an operating segment in our segment disclosure that does not meet the above-described criteria for a reportable segment. We evaluate performance and make decisions about allocating resources to our operating segments based on financial measures such as revenue and Adjusted EBITDA. In addition, we review non-financial measures such as customer growth, as appropriate.

Adjusted EBITDA is the primary measure used by our chief operating decision maker to evaluate segment operating performance and 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, “Adjusted EBITDA” is defined as earnings (loss) from continuing operations before net income tax benefit (expense), other non-operating income or expenses, net share of results of affiliates, net gains (losses) on extinguishment of debt, net realized and unrealized gains (losses) due to changes in fair value of certain investments and debt, net foreign currency gains (losses), net gains (losses) on derivative instruments, net interest expense, depreciation and amortization, share-based compensation, provisions and provision releases related to significant litigation and impairment, restructuring and other operating items. Other operating items include (a) gains and losses on the disposition of long-lived assets, (b) third-party costs directly associated with successful and unsuccessful acquisitions and dispositions, including legal, advisory and due diligence fees, as applicable, and (c) other acquisition-related items, such as gains and losses on the settlement of contingent consideration. Our internal decision makers believe Adjusted EBITDA is a meaningful measure because it represents a transparent view of our recurring operating performance that is unaffected by our capital structure and allows management to (1) readily view operating trends, (2) perform analytical comparisons and benchmarking between segments and (3) identify strategies to improve operating performance in the different countries in which we operate. A reconciliation of Adjusted EBITDA from continuing operations to earnings (loss) from continuing operations is presented below.

As of September 30, 2020, our reportable segments are as follows:

Consolidated:

•U.K./Ireland

•Belgium

•Switzerland

•Central and Eastern Europe

Nonconsolidated:

•VodafoneZiggo JV

All of our reportable segments derive their revenue primarily from residential and B2B communications services, including broadband internet, video, fixed-line telephony and mobile services.

Our central and corporate functions (Central and Corporate) primarily include (i) revenue earned from services provided to the VodafoneZiggo JV and various third parties related to transitional service agreements, (ii) revenue from sales of customer premises equipment to the VodafoneZiggo JV, (iii) costs associated with certain centralized functions, including billing systems, network operations, technology, marketing, facilities, finance and other administrative functions, and (iv) less significant consolidated operating segments that provide programming and other services.

During the fourth quarter of 2019, we changed the presentation of certain costs related to our centrally-managed technology and innovation function. These costs, which were previously included in Central and Corporate, are now allocated to our consolidated reportable segments. This change, which we refer to as the “Centrally-held Cost Allocation,” was made as a result of internal changes with respect to the way in which our chief operating decision maker evaluates the Adjusted EBITDA of our operating segments. Segment information for the three and nine months ended September 30, 2019 has been revised to reflect this change. The following table provides a summary of the impact on the Adjusted EBITDA of our consolidated reportable segments and Central and Corporate that resulted from the Centrally-held Cost Allocation.

	Three months ended September 30,						Nine months ended September 30,
	2020			2019			2020			2019
	in millions
Increase (decrease) to Adjusted EBITDA:
U.K./Ireland	$	(13.3	)	$	(16.2	)	$	(37.7	)	$	(48.0	)
Switzerland	(5.2		)	(7.8		)	(14.8		)	(24.5		)
Central and Eastern Europe	(2.6		)	(3.6		)	(7.8		)	(10.9		)
Central and Corporate	21.1			27.6			60.3			83.4
Total Liberty Global	$	—		$	—		$	—		$	—

Performance Measures of Our Reportable Segments

The amounts presented below represent 100% of each of our reportable segment’s revenue and Adjusted EBITDA. As we have the ability to control Telenet, we consolidate 100% of Telenet’s revenue and expenses in our condensed consolidated statements of operations despite the fact that third parties own a significant interest. The noncontrolling owners’ interests in the operating results of Telenet and other less significant majority-owned subsidiaries are reflected in net earnings or loss attributable to noncontrolling interests in our condensed consolidated statements of operations. Similarly, despite only holding a 50% noncontrolling interest in the VodafoneZiggo JV, we present 100% of its revenue and Adjusted EBITDA in the tables below. Our share of the VodafoneZiggo JV’s operating results is included in share of results of affiliates, net, in our condensed consolidated statements of operations.

	Revenue
	Three months ended September 30,						Nine months ended September 30,
	2020			2019			2020			2019
	in millions
U.K./Ireland	$	1,669.5		$	1,579.9		$	4,821.9		$	4,885.2
Belgium	746.6			721.9			2,147.2			2,147.0
Switzerland	315.0			311.7			930.9			942.7
Central and Eastern Europe	124.2			117.2			359.5			355.4
Central and Corporate	101.9			110.5			296.8			231.4
Intersegment eliminations	(2.7		)	(0.3		)	(3.1		)	(2.4		)
Total	$	2,954.5		$	2,840.9		$	8,553.2		$	8,559.3
VodafoneZiggo JV	$	1,166.7		$	1,096.9		$	3,345.4		$	3,275.3

	Adjusted EBITDA
	Three months ended September 30,						Nine months ended September 30,
	2020			2019 (a)			2020			2019 (a)
	in millions
U.K./Ireland	$	665.0		$	657.8		$	1,975.3		$	2,037.5
Belgium	367.4			358.6			1,053.1			1,047.0
Switzerland	154.4			160.2			439.4			476.3
Central and Eastern Europe	54.0			54.6			161.0			162.4
Central and Corporate	(31.6		)	(19.2		)	(80.8		)	(138.6		)
Intersegment eliminations (b)	—			(0.3		)	—			1.1
Total	$	1,209.2		$	1,211.7		$	3,548.0		$	3,585.7
VodafoneZiggo JV	$	559.1		$	500.1		$	1,593.4		$	1,481.5

_______________

(a) Amounts have been revised to reflect the retrospective impact of the Centrally-held Cost Allocation, as described above.

(b) Amounts for the 2019 periods are related to transactions between our continuing and discontinued operations prior to the disposal dates of such discontinued operations.

The following table provides a reconciliation of earnings (loss) from continuing operations to Adjusted EBITDA:

	Three months ended September 30,						Nine months ended September 30,
	2020			2019			2020			2019
	in millions
Earnings (loss) from continuing operations	$	(973.6	)	$	587.2		$	(459.7	)	$	(59.3	)
Income tax benefit	(161.2		)	(70.8		)	(239.1		)	(16.2		)
Other income, net	(5.3		)	(36.3		)	(67.2		)	(75.3		)
Share of results of affiliates, net	27.1			32.8			99.1			173.0
Losses on debt extinguishment, net	0.3			48.5			220.4			97.3
Realized and unrealized losses (gains) due to changes in fair values of certain investments and debt, net	21.5			(56.4		)	399.0			90.5
Foreign currency transaction losses (gains), net	755.7			(54.2		)	842.0			(165.8		)
Realized and unrealized losses (gains) on derivative instruments, net	717.8			(582.1		)	(199.8		)	(652.2		)
Interest expense	279.8			340.1			874.8			1,071.0
Operating income	662.1			208.8			1,469.5			463.0
Impairment, restructuring and other operating items, net	(15.8		)	36.0			47.4			140.1
Depreciation and amortization	458.5			892.9			1,787.7			2,754.3
Share-based compensation expense	104.4			74.0			243.4			228.3
Adjusted EBITDA	$	1,209.2		$	1,211.7		$	3,548.0		$	3,585.7

Property and Equipment Additions of our Reportable Segments

The property and equipment additions of our reportable segments (including capital additions financed under vendor financing or finance lease arrangements) are presented below and reconciled to the capital expenditure amounts included in our condensed consolidated statements of cash flows. For additional information concerning capital additions financed under vendor financing and finance lease arrangements, see notes 8 and 10.

	Nine months ended September 30,
	2020			2019
	in millions
U.K./Ireland	$	1,029.7		$	1,128.5
Belgium	375.1			391.6
Switzerland	181.8			207.2
Central and Eastern Europe	69.3			66.2
Central and Corporate (a)	244.2			246.6
Total property and equipment additions	1,900.1			2,040.1
Assets acquired under capital-related vendor financing arrangements	(1,033.6		)	(1,303.2		)
Assets acquired under finance leases	(31.2		)	(47.2		)
Changes in current liabilities related to capital expenditures	125.2			210.4
Total capital expenditures, net	$	960.5		$	900.1
Capital expenditures, net:
Third-party payments	$	963.0		$	976.0
Proceeds received for transfers to related parties (b)	(2.5		)	(75.9		)
Total capital expenditures, net	$	960.5		$	900.1
Property and equipment additions - VodafoneZiggo JV	$	685.3		$	680.4

_______________

(a) Includes (i) property and equipment additions representing centrally-owned assets that benefit our operating segments and (ii) the net impact of certain centrally-procured network equipment that is ultimately transferred to our operating segments.

(b) Primarily relates to transfers of centrally-procured property and equipment to the VodafoneZiggo JV and, for the 2019 period, our discontinued operations.

Revenue by Major Category

Our revenue by major category for our consolidated reportable segments is set forth below:

	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019
	in millions
Residential revenue:
Residential cable revenue (a):
Subscription revenue (b):
Broadband internet	$	822.8	$	776.6	$	2,400.6	$	2,378.9
Video	680.8		660.5		1,997.5		2,029.2
Fixed-line telephony	332.4		341.1		998.9		1,070.3
Total subscription revenue	1,836.0		1,778.2		5,397.0		5,478.4
Non-subscription revenue	48.6		43.6		137.2		142.1
Total residential cable revenue	1,884.6		1,821.8		5,534.2		5,620.5
Residential mobile revenue (c):
Subscription revenue (b)	251.1		235.0		714.3		694.4
Non-subscription revenue	179.6		166.0		454.6		496.0
Total residential mobile revenue	430.7		401.0		1,168.9		1,190.4
Total residential revenue	2,315.3		2,222.8		6,703.1		6,810.9
B2B revenue (d):
Subscription revenue	134.5		119.8		382.5		350.4
Non-subscription revenue	367.4		343.5		1,055.1		1,072.7
Total B2B revenue	501.9		463.3		1,437.6		1,423.1
Other revenue (e)	137.3		154.8		412.5		325.3
Total	$	2,954.5	$	2,840.9	$	8,553.2	$	8,559.3

_______________

(a) Residential cable subscription revenue includes amounts received from subscribers for ongoing services and the recognition of deferred installation revenue over the associated contract period. Residential cable non-subscription revenue includes, among other items, channel carriage fees, late fees and revenue from the sale of equipment.

(b) Residential subscription revenue from subscribers who purchase bundled services at a discounted rate is generally allocated proportionally to each service based on the standalone price for each individual service. As a result, changes in the standalone pricing of our cable and mobile products or the composition of bundles can contribute to changes in our product revenue categories from period to period.

(c) Residential mobile subscription revenue includes amounts received from subscribers for ongoing services. Residential mobile non-subscription revenue includes, among other items, interconnect revenue and revenue from sales of mobile handsets and other devices.

(d) B2B subscription revenue represents revenue from services to certain small or home office (SOHO) subscribers. SOHO subscribers pay a premium price to receive expanded service levels along with broadband internet, video, fixed-line telephony or mobile services that are the same or similar to the mass marketed products offered to our residential subscribers. B2B non-subscription revenue includes (i) revenue from business broadband internet, video, fixed-line telephony, mobile and data services offered to medium to large enterprises and, on a wholesale basis, to other operators and (ii) revenue from long-term leases of portions of our network.

(e) Other revenue includes, among other items, (i) revenue earned from transitional and other services provided to various third parties, (ii) revenue earned from the JV Services and the sale of customer premises equipment to the VodafoneZiggo JV and (iii) broadcasting revenue in Belgium and Ireland.

Geographic Segments

The revenue of our geographic segments is set forth below:

	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019
	in millions
U.K.	$	1,543.6	$	1,456.3	$	4,457.2	$	4,507.5
Belgium	746.6		721.9		2,147.2		2,147.0
Switzerland	315.0		311.7		930.9		942.7
Ireland	125.9		123.6		364.7		377.7
Poland	111.6		104.9		322.0		318.3
Slovakia	12.6		12.3		37.5		37.1
Other, including intersegment eliminations	99.2		110.2		293.7		229.0
Total	$	2,954.5	$	2,840.9	$	8,553.2	$	8,559.3
VodafoneZiggo JV (the Netherlands)	$	1,166.7	$	1,096.9	$	3,345.4	$	3,275.3