Liberty Global plc (NASDAQ:LBTYA) Files An 8-K Results of Operations and Financial Condition

ME Staff 8-k
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Liberty Global plc (NASDAQ:LBTYA) Files An 8-K Results of Operations and Financial Condition

Item 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION / Item
7.01 REGULATION FD DISCLOSURE

Virgin Media Inc. (Virgin Media), Unitymedia GmbH, UPC Holding
B.V., Cable Wireless Communications Limited and VTR Finance B.V.
are each wholly-owned subsidiaries of Liberty Global plc (Liberty
Global, we, our or the Company), and are each a separate
fixed-income borrowing group of Liberty Global.
On February 15, 2017, Liberty Global provided selected, preliminary
unaudited financial and operating information for these
fixed-income borrowing groups for the quarter ended December 31,
2016 by posting a press release (the Q4 2016 Fixed Income Release)
to its website. As further described below, we are amending that
press release by means of this Current Report on Form 8-K/A.
Background
Virgin Media, a wholly-owned subsidiary of Liberty Global, is a
broadband communications operator in the United Kingdom (U.K.) and
the Republic of Ireland (Ireland). Today, Virgin Media published
its report for the year ended December 31, 2016 (the VM Annual
Report). In connection with the publication of the VM Annual
Report, which is available under the investor relations section of
the Companys website (www.libertyglobal.com), the Company is
amending its Current Report on Form 8-K filed on February 15, 2017
to revise disclosure regarding Virgin Media.
As more fully described below, this amendment revises the number of
premises added to Virgin Medias network as part of its new build
initiative in the U.K. and Ireland (Project Lightning), as included
in the Q4 2016 Fixed Income Release.>The amended Q4 2016 Fixed
Income Release is attached as Exhibit 99.1. We are also
contemporaneously amending the applicable disclosures in (i) the
press release announcing Liberty Globals operating and financial
results for the quarter ended December 31, 2016 (the Q4 2016 LG
Release), also dated February 15, 2017, (ii) our 2016 Annual Report
on Form 10-K and (iii) slides 4, 6 and 7 that were included in our
February 16, 2017 earnings presentation (the Liberty Global Group
Q4 2016 Investor Call Presentation). Apart from amending the
applicable disclosures to conform to the disclosures made in this
Current Report on Form 8-K/A, we are not otherwise amending nor
updating the Q4 2016 Fixed Income Release.
No changes will be made to our consolidated financial statements as
a result of the revisions discussed below, as the impact on our
consolidated financial statements is not material. In addition, no
changes are required to our or Virgin Medias customer and revenue
generating unit statistics at December 31, 2016.
Discussion
We previously announced a new build program seeking to
substantially extend our European networks over several years. In
the Q4 2016 LG Release, we reported that our European operations
added 1.4 million premises to our networks during the 2016 calendar
year (Added Premises), including 465,000 premises added by Virgin
Media. These Added Premises included 323,000 premises connected to
networks in the U.K. and Ireland (Connected Premises) and 142,000
premises in many U.K. locations where the Company understood
construction to be essentially complete, but which still required
power, headend capacity upgrades and/or physical connection
activities (Inactive Premises). These Inactive Premises were
expected to become Connected Premises during the first quarter of
2017. In addition, we previously reported that we expect to connect
a total of approximately 1.4 million premises to networks
attributed to the Liberty Global Group during 2017, including up to
800,000 premises connected to Project Lightning.
In late February 2017, the Company>discovered that the
construction work necessary to connect a substantial number of the
Inactive Premises had not progressed as originally understood. The
Company then initiated a review of the records underlying the
construction status of the Inactive Premises and the circumstances
that led to the overstatement of their construction progress. Our
review found that the completion status of a number of Inactive
Premises had been misrepresented. In connection with this review,
four Virgin Media employees have been suspended and removed from
their posts and employment investigations are ongoing. Pending the
results of these investigations, disciplinary action may be taken
against employees, including dismissal.
The Company has determined that most of the Inactive Premises did
not meet the prescribed requirements for inclusion in that category
as of year-end 2016. We expect that all of these Inactive Premises
will be connected before June 30, 2017. Although this connection
activity will impact the total number of premises that we are able
to connect to Virgin Medias network during the first half of 2017,
we do not believe that any shortfall during this timeframe will
have any impact on the total number of premises that we expect to
add to the overall Project Lightning program.
We have taken several steps to strengthen our Project Lightning new
build program, including among other items:

We have appointed Robert Evans as Managing Director,
Lightning, with full responsibility for the Project
Lighting build. In this role, Mr. Evans will jointly report
to Balan Nair, Liberty Globals Chief Technology Innovation
Officer and Tom Mockridge, Virgin Medias Chief Executive
Officer;
Virgin Media has appointed a new Project Lightning
management team on the ground in the U.K. that will report
to Mr. Evans;
We are providing additional resources to manage increased
volumes of construction and planning activity in the U.K.,
including increased focus on wayleaves and easements; and
Virgin Media has appointed a new President and Chief
Operating Officer, who will be responsible for delivering
Project Lightning customer volumes among other
responsibilities, as further described below. This role
will report to Tom Mockridge.
We will no longer include Inactive Premises in the Added Premises
figures that we report in future periods to Project Lightning and
our other network extension programs. We are also revising our
disclosure of the Added Premises under Project Lightning that we
reported through December 31, 2016 to exclude (i) the 142,000
Inactive Premises from Added Premises (including 120,000 added
during the fourth quarter of 2016) and (ii) approximately 9,000
premises that were inadvertently classified by Virgin Media as
Connected Premises at December 31, 2016, as set forth in the
table below.
Virgin Media (Project Lightning)
Liberty Global Group (Project Lightning and other
network extension programs)
Previously-reported
As revised
Previously-reported
As revised
Added Premises:
Program-to-date through December 31, 2016
718,000
(a)
567,000
1,680,000
(c)
1,529,000
Year ended December 31, 2016
465,000
(a)
314,000
1,427,000
(d)
1,276,000
Quarter ended December 31, 2016
215,000
(a)
86,000
(b)
584,000
(e)
455,000
(b)

_______________

(a)
As reported in the Q4 2016 Fixed Income Release.
(b)
Adjusted to exclude the net increase of 120,000 Inactive
Premises that occurred during the fourth quarter of 2016
and the 9,000 premises that Virgin Media inadvertently
classified as Connected Premises at December 31, 2016.
(c)
Figure includes (1) the 718,000 Added Premises that we
reported as connected over the life of Project Lightning,
as disclosed in the Q4 2016 Fixed Income Release, and (2)
962,000 additional premises that were added in the
following segments, as reported in the Liberty Global Group
Q4 2016 Investor Call Presentation: (i) 590,000 in Central
Eastern Europe, (ii) 219,000 in Germany (including 139,000
upgrades), (iii) 58,000 in the Netherlands, (iv) 51,000 in
Switzerland Austria and (v) 44,000 in Belgium.
(d)
Figure includes (1) the 465,000 Added Premises that we
reported as connected during 2016 to Project Lightning, as
disclosed in the Q4 2016 Fixed Income Release, and (2)
962,000 additional premises that were added in the
following segments, as reported in the Liberty Global Group
Q4 2016 Investor Call Presentation: (i) 590,000 in Central
Eastern Europe, (ii) 219,000 in Germany (including 139,000
upgrades), (iii) 58,000 in the Netherlands, (iv) 51,000 in
Switzerland Austria and (v) 44,000 in Belgium.
(e)
Calculated as the difference between the Liberty Global
Groups December 31, 2016 year-to-date new homes connected
amount presented above of 1,427,000 and its September 30,
2016 year-to-date new homes connected amount of 843,000, as
reported in the Companys press release dated November 3,
2016, which provided its operating and financial results
for the quarter ended September 30, 2016.
Other than as noted in the above table, no other changes are
required to our reported Added Premises numbers.

In connection with its review, the Company also determined to
change how it presents the penetration rates associated with
its Project Lightning new build program. Previously, these
penetration rates were based on the cumulative number of gross
installations during the periods presented (Install
Penetration). We now present these penetration rates based on
the number of active customers at the end of the respective
timeframe presented (Active Customer Penetration).
Notwithstanding the change in methodology, we continue to
believe that our Active Customer Penetration for our Project
Lightning build will reach approximately 40% three years after
the premises are available to be marketed. The following table
presents the penetration rates for the periods that were
disclosed in slide 7 of the Liberty Global Group Q4 2016
Investor Call Presentation under the following methodologies:
(i) previously reported Install Penetration, (ii) Install
Penetration, as adjusted to remove Inactive Premises, and (iii)
Active Customer Penetration:
3 months
6 months
9 months
12 months
15 months
Install Penetration (previously reported presentation
including Inactive Premises in the denominator)
15%
19%
23%
25%
32%
Adjusted Install Penetration (as adjusted to remove
Inactive Premises from the denominator)
16%
20%
24%
25%
32%
Active Customer Penetration (revised presentation
excluding Inactive Premises from the denominator)
16%
19%
22%
23%
27%

The Company has reconsidered the number of premises that it
expects to add to the Liberty Global Groups European networks
during 2017, taking into account the delay in construction of
premises in the U.K. as described above, and now estimates that
a total of 1.3 million to 1.4 million new premises will be
connected during 2017, including 700,000 to 800,000 premises to
Project Lightning. These estimates include the completion
during the first half of 2017 of the 142,000 Inactive Premises
in the U.K. It should be noted that any estimate involving new
build activity of the magnitude of Project Lightning and our
other new build programs is inherently difficult to determine
and is dependent upon multiple factors impacting construction.
Depending on a variety of factors, including the financial and
operational results of our new build programs, all or any
portion of these programs may be continued, modified or
cancelled at our discretion.
Liberty Global Group’s guidance for rebased operating cash
flow (OCF) growth and adjusted free cash flow, and Liberty
Global Group’s and Virgin Media’s guidance for property and
equipment additions as a percentage of revenue, remain
unchanged.
As noted above, no changes will be made to the Companys
consolidated financial statements as a result of the revision
to Virgin Medias Added Premises as the impact of the difference
between the initially reported and the adjusted construction
status of the Inactive Premises is not material. Similarly, the
2016 property and equipment additions presented in the VM
Annual Report have not changed from the amounts presented for
Virgin Media in the Q4 2016 Fixed Income Release.
Virgin Media Announces New Senior Management Position
Virgin Media will appoint Dana Strong as President and Chief
Operating Officer, reporting to Virgin Medias Chief Executive
Officer, Tom Mockridge. Ms. Strongs responsibilities will
include end-to-end responsibility for the consumer business
spanning installations, customer care, product development and
marketing. Ms. Strong has held a variety of previous senior
management roles at Liberty Global and its subsidiaries
including Chief Transformation Officer at Liberty Global and
Managing Director, UPC Ireland.
* * * * * * *
This current report contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including statements with respect to our strategies,
future growth prospects and opportunities; our expectations
with respect to rebased OCF, adjusted free cash flow and
property and equipment additions as a percentage of revenue;
and our plans and expectations relating to new build and
network extension opportunities; 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 our services and their willingness to upgrade to
our more advanced offerings; our ability to meet challenges
from competition, to manage rapid technological change or to
maintain or increase rates to our subscribers or to pass
through increased costs to our subscribers; the effects of
changes in laws or regulation; general economic factors; our
ability to obtain regulatory approval and satisfy regulatory
conditions associated with acquisitions and dispositions; our
ability to successfully acquire and integrate new businesses
and realize anticipated efficiencies from businesses we
acquire; the availability of attractive

programming for our video services and the costs associated
with such programming; our ability to achieve forecasted
financial and operating targets; the outcome of any pending
or threatened litigation; the ability of our operating
companies to access cash of their respective subsidiaries;
the impact of our operating companies future financial
performance, or market conditions generally, on the
availability, terms and deployment of capital; fluctuations
in currency exchange and interest rates; the ability of
suppliers and vendors (including our third-party wireless
network providers under our MVNO arrangements) to timely
deliver quality products, equipment, software, services and
access; our ability to adequately forecast and plan future
network requirements including the costs and benefits
associated with network expansions; and other factors
detailed from time to time in our filings with the Securities
and Exchange Commission, including our most recently filed
Form 10-K, as amended on March 28, 2017. These
forward-looking statements speak only as of the date of this
current report. We expressly disclaim any obligation or
undertaking to disseminate any updates or revisions to any
forward-looking statement contained herein to reflect any
change in our expectations with regard thereto or any change
in events, conditions or circumstances on which any such
statement is based.
The press release attached hereto as Exhibit 99.1 is being
furnished to the SEC under both Item 2.02 Results of
Operations and Financial Condition and 7.01 Regulation FD
Disclosure of Form 8-K. The information furnished to this
Form 8-K/A (including the exhibit hereto) shall not be
considered filed under the Securities Exchange Act of 1934,
as amended, nor shall it be incorporated by reference into
any of Liberty Globals filings under the Securities Act of
1933, as amended, or under the Securities Exchange Act of
1934, as amended, unless Liberty Global expressly states in
such filing that such information is to be considered filed
or incorporated by reference therein.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No.> Exhibit Name
99.1 Press release dated February 15, 2017, as amended on
March 28, 2017


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Liberty Global plc (NASDAQ:LBTYA) closed its last trading session up +0.37 at 35.50 with 2,370,515 shares trading hands.