Segment Reporting

9 Months Ended

Sep. 30, 2023

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) 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 values of certain investments, 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 earnings or loss from continuing operations to Adjusted EBITDA is presented below.

As of September 30, 2023, our reportable segments are as follows:

Consolidated:

•Switzerland

•Belgium

•Ireland

Nonconsolidated:

•VMO2 JV

•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 Other” category primarily includes (i) our operations in Slovakia, (ii) services provided to the VMO2 JV, the VodafoneZiggo JV and various third parties related to transitional service agreements, (iii) sales of CPE to the VodafoneZiggo JV and (iv) certain centralized functions, including billing systems, network operations, technology, marketing, facilities, finance and other administrative functions.

We present only the reportable segments of our continuing operations in the tables below.

During the first quarter of 2023, we changed the terms related to, and approach to how we reflect the allocation of, charges for certain products and services that our centrally-managed technology and innovation function (our T&I Function) provide to our consolidated reportable segments (the Tech Framework). These products and services include CPE hardware and related essential software, maintenance, hosting and other services. As a result, our consolidated reportable segments now capitalize the combined cost of the CPE hardware and essential software as property and equipment additions. The other services, including maintenance and hosting, continue to be reported as operating costs in the period incurred (included in our Adjusted EBITDA). The corresponding amounts charged by our T&I Function are reflected as revenue when earned. The new Tech Framework is a result of internal changes with respect to the way in which our chief operating decision maker evaluates the revenue, Adjusted EBITDA and property and equipment additions of our consolidated reportable segments. Segment information has been revised, as applicable, to reflect these changes. The following table provides a summary of the impact on the revenue, Adjusted EBITDA and property and equipment additions of our consolidated reportable segments and Central and Other.

	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
	in millions
Increase (decrease) to revenue (a):
Central and Other	$	65.4	$	60.9	$	184.0	$	180.8
Intersegment eliminations	(65.4)		(60.9)		(184.0)		(180.8)
Total	$	—	$	—	$	—	$	—
Increase (decrease) to Adjusted EBITDA (b):
Switzerland	$	(16.4)	$	(9.7)	$	(48.3)	$	(29.9)
Belgium	(2.2)		(2.1)		(6.6)		(6.5)
Ireland	(6.0)		(3.3)		(18.0)		(10.6)
Central and Other	40.0		29.2		118.5		91.7
Intersegment eliminations	(15.4)		(14.1)		(45.6)		(44.7)
Total	$	—	$	—	$	—	$	—
Increase (decrease) to property and equipment additions (c):
Switzerland	$	5.8	$	5.3	$	17.0	$	16.7
Belgium	7.0		6.4		20.8		20.4
Ireland	2.6		2.4		7.8		7.6
Central and Other	—		—		—		—
Intersegment eliminations	(15.4)		(14.1)		(45.6)		(44.7)
Total	$	—	$	—	$	—	$	—

_______________

(a)Amounts reflect the revenue recognized within our T&I Function, as well as any applicable markup, related to the Tech Framework.

(b)Amounts reflect the charge to each respective consolidated reportable segment related to the service and maintenance component of the Tech Framework and, additionally for Central and Other, the Adjusted EBITDA impact of the value attributed to centrally-held internally developed technology that is embedded within our various CPE, as well as any applicable markup.

(c)Amounts reflect the charge to each respective consolidated reportable segment related to the value attributed to centrally-held internally developed technology that is embedded within our various CPE, as well as any applicable markup.

During the second quarter of 2023, we determined to market and sell certain of our internally-developed software to third parties. As a result of these strategic and operational changes, from May 2023, proceeds from the licensing and related sale of products from this internally-developed software (including proceeds generated from our arrangements with the VMO2 JV and the VodafoneZiggo JV) have been, and will continue to be, applied against the net book value of our existing internally-developed capitalized software until that balance is reduced to zero, after which time we will resume recognizing revenue for such licensing and related sale of products. Further, we now expense the costs of development of such software due to the fact that it is now externally marketed to third parties. During the three and nine months ended September 30, 2023, revenue within our Central and Other category was reduced by $61.5 million and $92.2 million, respectively, as a result of this change and the associated accounting treatment, including $33.8 million and $49.5 million, respectively, from the VMO2 JV and $19.9 million and $29.7 million, respectively, from the VodafoneZiggo JV.

Performance Measures of Our Reportable Segments

The amounts presented below represent 100% of each of our reportable segment’s revenue and Adjusted EBITDA. The noncontrolling owners’ interests in the operating results of Telenet, prior to the Telenet Takeover Bid, 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. Furthermore, despite only holding a 50% noncontrolling interest in both the VMO2 JV and the VodafoneZiggo JV, we present 100% of the revenue and Adjusted EBITDA of those entities in the tables below. Our share of the operating results of the VMO2 JV and the VodafoneZiggo JV 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,
	2023		2022 (a)		2023		2022 (a)
	in millions
Switzerland	$	859.3	$	789.8	$	2,482.9	$	2,377.3
Belgium	775.2		665.1		2,296.7		2,078.6
Ireland	125.5		116.1		372.4		365.4
Central and Other	164.3		238.3		615.0		720.2
Intersegment eliminations (b)	(69.8)		(63.0)		(196.1)		(187.7)
Total	$	1,854.5	$	1,746.3	$	5,570.9	$	5,353.8
VMO2 JV	$	3,503.8	$	3,042.1	$	10,058.0	$	9,642.7
VodafoneZiggo JV	$	1,125.2	$	1,041.7	$	3,297.0	$	3,237.3

_______________

(a)Amounts have been revised, as applicable, to reflect the retrospective impact of the Tech Framework, as described above.

(b)Amounts primarily relate to (i) the revenue recognized within our T&I Function related to the Tech Framework and (ii) for the nine months ended September 30, 2022, transactions between our continuing and discontinued operations.

	Adjusted EBITDA
	Three months ended September 30,				Nine months ended September 30,
	2023		2022 (a)		2023		2022 (a)
	in millions
Switzerland	$	311.0	$	292.8	$	861.1	$	850.3
Belgium	339.8		316.6		988.7		982.9
Ireland	45.9		46.3		134.7		141.9
Central and Other	(83.6)		22.4		(115.3)		68.5
Intersegment eliminations (b)	(15.4)		(14.1)		(45.6)		(45.5)
Total	$	597.7	$	664.0	$	1,823.6	$	1,998.1
VMO2 JV	$	1,170.9	$	1,060.5	$	3,335.6	$	3,515.2
VodafoneZiggo JV	$	518.3	$	501.4	$	1,474.7	$	1,530.1

_______________

(a)Amounts have been revised, as applicable, to reflect the retrospective impact of the Tech Framework, as described above.

(b)Amounts relate to (i) the Adjusted EBITDA impact to Central and Other of the value attributed to centrally-held internally developed technology that is embedded within our various CPE, as well as any applicable markup, and (ii) for the nine months ended September 30, 2022, transactions between our continuing and 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,
	2023		2022		2023		2022
	in millions
Earnings (loss) from continuing operations	$	822.7	$	2,431.7	$	(402.1)	$	5,789.6
Income tax expense (benefit)	(1.7)		64.8		170.0		209.6
Other income, net	(39.8)		(21.7)		(159.5)		(63.0)
Gain associated with the Telenet Wyre Transaction	(377.8)		—		(377.8)		—
Gain on Telenet Tower Sale	—		(7.1)		—		(700.4)
Share of results of affiliates, net	240.8		(501.0)		341.1		(812.6)
Realized and unrealized losses (gains) due to changes in fair values of certain investments, net	(71.5)		2.1		344.8		207.4
Foreign currency transaction gains, net	(664.4)		(1,462.7)		(417.9)		(3,186.4)
Realized and unrealized gains on derivative instruments, net	(177.1)		(546.9)		(193.8)		(1,668.8)
Interest expense	241.4		149.7		656.0		416.8
Operating income (loss)	(27.4)		108.9		(39.2)		192.2
Impairment, restructuring and other operating items, net	(13.7)		6.4		6.6		74.1
Depreciation and amortization	584.0		506.0		1,681.8		1,588.4
Share-based compensation expense	54.8		42.7		174.4		143.4
Adjusted EBITDA	$	597.7	$	664.0	$	1,823.6	$	1,998.1

Property and Equipment Additions of our Reportable Segments

The property and equipment additions of our reportable segments (including capital additions financed under capital-related 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, respectively.

	Nine months ended September 30,
	2023		2022 (a)
	in millions
Switzerland	$	406.8	$	412.5
Belgium	512.1		454.3
Ireland	128.0		91.0
Central and Other (b)	106.4		176.5
Intersegment eliminations (c)	(45.6)		(44.7)
Total property and equipment additions	1,107.7		1,089.6
Assets acquired under capital-related vendor financing arrangements	(129.9)		(142.9)
Assets acquired under finance leases	(20.8)		(25.8)
Changes in current liabilities related to capital expenditures	59.2		8.4
Total capital expenditures, net	$	1,016.2	$	929.3
Property and equipment additions:
VMO2 JV	$	1,949.1	$	2,053.7
VodafoneZiggo JV	$	737.8	$	683.7

_______________

(a)Amounts have been revised, as applicable, to reflect the retrospective impact of the Tech Framework, as described above.

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

(c)Amounts reflect the charge under the Tech Framework to each respective consolidated reportable segment related to the value attributed to centrally-held internally developed technology that is embedded within our various CPE, as well as any applicable markup.

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,
	2023		2022		2023		2022
	in millions
Residential revenue:
Residential fixed revenue (a):
Subscription revenue (b):
Broadband internet	$	385.6	$	336.1	$	1,111.0	$	1,037.5
Video	276.6		261.3		822.5		817.2
Fixed-line telephony	91.2		91.6		273.3		291.1
Total subscription revenue	753.4		689.0		2,206.8		2,145.8
Non-subscription revenue	18.3		11.7		43.8		36.7
Total residential fixed revenue	771.7		700.7		2,250.6		2,182.5
Residential mobile revenue (c):
Subscription revenue (b)	401.4		356.5		1,133.5		1,056.7
Non-subscription revenue	119.8		126.8		374.2		387.9
Total residential mobile revenue	521.2		483.3		1,507.7		1,444.6
Total residential revenue	1,292.9		1,184.0		3,758.3		3,627.1
B2B revenue (d):
Subscription revenue	144.6		127.4		418.9		387.6
Non-subscription revenue	234.8		214.0		688.9		644.7
Total B2B revenue	379.4		341.4		1,107.8		1,032.3
Other revenue (e)	182.2		220.9		704.8		694.4
Total	$	1,854.5	$	1,746.3	$	5,570.9	$	5,353.8

_______________

(a)Residential fixed subscription revenue includes amounts received from subscribers for ongoing services and the recognition of deferred installation revenue over the associated contract period. Residential fixed 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 fixed 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 (i) services provided to small or home office (SOHO) subscribers and (ii) mobile services provided to medium and large enterprises. 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 (a) revenue from business broadband internet, video, fixed-line telephony and data services offered to medium and large

enterprises and, fixed-line and mobile services on a wholesale basis, to other operators and (b) revenue from long-term leases of portions of our network.

(e)Other revenue includes, among other items, (i) broadcasting revenue in Belgium, Ireland and Switzerland, (ii) revenue earned from the U.K. JV Services and NL JV Services, (iii) revenue earned from the sale of CPE to the VodafoneZiggo JV and (iv) revenue earned from transitional and other services provided to various third parties.

Geographic Segments

The revenue of our geographic segments is set forth below:

	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
	in millions
Switzerland	$	859.3	$	789.8	$	2,482.9	$	2,377.3
Belgium	743.1		665.1		2,190.8		2,078.6
Ireland	125.5		116.1		372.4		365.4
Slovakia	12.8		12.0		39.2		37.3
Other, including intersegment eliminations (a)	113.8		163.3		485.6		495.2
Total	$	1,854.5	$	1,746.3	$	5,570.9	$	5,353.8
VMO2 JV (U.K.)	$	3,503.8	$	3,042.1	$	10,058.0	$	9,642.7
VodafoneZiggo JV (Netherlands)	$	1,125.2	$	1,041.7	$	3,297.0	$	3,237.3

______________

(a)Revenue from our other geographic segments relates to (i) our Central functions, most of which are located in the Netherlands and the U.K., and (ii) certain other operations at Telenet, primarily in the U.S. and Luxembourg.