Exhibit 99.1
LIBERTY GLOBAL REPORTS FISCAL 2006 RESULTS
All 2006 Guidance Targets Exceeded
2006 Rebased Operating Cash Flow Growth of 16%
$500 million Self Tender Offers Announced
Denver, Colorado — February 28, 2007: Liberty Global, Inc. (“Liberty Global” or the “Company”) (NASDAQ: LBTYA, LBTYB and LBTYK), today announces financial and operating results for the fourth quarter (Q4) and year ended December 31, 2006.
Highlights for the year compared to the results for the same period last year (unless noted), include(1):
· 2006 organic additions(2) of 1.63 million RGUs(3) (540,000 in Q4), a 45% increase over 2005
· Revenue of $6.49 billion, reflecting rebased(4) growth of 11%
· Operating cash flow (OCF)(5) of $2.34 billion, reflecting rebased growth of 16%
· Loss from continuing operations increased to $334 million
· Net earnings increased to $706 million as compared to a net loss of $80 million
Liberty Global’s President and CEO Mike Fries stated, “We successfully delivered on all of our financial, operational and strategic objectives, and meaningfully exceeded our 2006 full-year guidance targets. We achieved double-digit revenue and mid-teens OCF rebased growth, rebalanced our European operations to focus on higher growth markets, and repurchased over $2.0 billion of our equity since the beginning of 2006. As we build on our 2006 results, particularly our fourth quarter performance, we are entering 2007 with strong operating momentum.”
“For the full year, we increased revenue by 44% to $6.49 billion and OCF by 47% to $2.34 billion compared to our results in 2005. These results reflect revenue and OCF rebased growth rates of 11% and 16%, respectively, after adjusting to neutralize the impact of acquisitions and currency movements. Our Q4 results were particularly strong, as we drove rebased revenue and OCF growth to 12% and 18%, respectively. Our operations in Switzerland, Central and Eastern Europe and Chile continue to be top performers and were key in delivering our overall 2006 results.”
“In terms of subscriber growth, we generated 1.63 million organic RGU additions during 2006, a 45% increase over our RGU additions the prior year. In Europe, the fourth quarter is typically our strongest quarter for subscriber growth and this year was no exception, as we added 540,000 organic RGUs globally, driven by a 48% increase in our European RGU additions compared to the same period last year.”
“We now serve 2.2 million digital cable subscribers, ending 2006 with a digital cable penetration of 19%. We continue to see a significant opportunity to upsell our 10 million analog customers to advanced digital services, driven by premium content, digital video recorders, high definition and video on demand offerings. In particular, we added nearly one million digital cable subscribers organically worldwide during 2006, including over 400,000 digital cable RGUs in the Netherlands(6) and over 300,000 digital cable RGUs in Japan. As a result of our digital initiative in the Netherlands, we finished 2006 with 23% digital penetration in the Netherlands and, on average, we are seeing an incremental ARPU of over €6 (before discounts) from our digital television subscribers, which compares to our base analog ARPU of €13.”
(1) Our consolidated financial statements have been reclassified to present UPC Norway, UPC Sweden, UPC France and Priority Telecom Norway (PT Norway) as discontinued operations. As a result, their financial information for all historical periods has been retroactively removed from the reported figures. All references to our subscriber metrics exclude the impact of our discontinued operations. Additionally, we sold our Belgium operations to an equity affiliate on December 31, 2006. As a result of our continued interest in the Belgium operations, our operating results and cash flows, including revenue, OCF and FCF include the impact of Belgium for all periods. With respect to RGU metrics, organic additions include Belgium additions, but total RGUs at December 31, 2006, exclude Belgium.
(2) Organic figures exclude RGUs at the date of acquisition but include the impact of changes in RGUs from the date of acquisition. Organic figures represent additions on a net basis.
(3) Please see footnote 4 on Page 22 for the definition of Revenue Generating Units (RGUs).
(4) For purposes of calculating rebased growth rates on a comparable basis for all businesses that we owned during the respective periods in 2006, we have adjusted our historical 2005 revenue and OCF to (i) include the pre-acquisition revenue and OCF of certain entities acquired during 2005 and 2006 in the respective 2005 rebased amounts to the same extent that the revenue and OCF of such entities are included in the respective 2006 results and (ii) reflect the translation of our 2005 rebased amounts at the applicable average exchange rates that were used to translate our 2006 results. Please see page 17 for supplemental information.
(5) Please see page 13 for an explanation of operating cash flow and the required reconciliation.
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“Our broadband Internet products continue to see strong demand from our customers, and we are improving the value proposition by increasing our downstream speeds across most of our markets, where we frequently offer the fastest speeds available. In the fourth quarter alone, we surpassed the 200,000 organic addition mark for broadband Internet subscribers for the first time, finishing 2006 with 3.8 million subscribers. On the telephony front, we had launched VoIP (Voice-over-Internet-Protocol) across 12 markets by year-end and had approximately 13 million VoIP homes ready for service. Due in part to the launch of VoIP, we increased the number of our triple-play customers by 45% during 2006, and, in 2007, we will continue to aggressively market our bundled products.”
“In 2006, we successfully rebalanced our European footprint to focus on high growth markets. We disposed of our operations in Norway, Sweden and France at very attractive multiples, generating $2.5 billion in aggregate after-tax cash proceeds. Additionally, we completed several key acquisitions during the year, which expanded our reach in Japan and the Czech Republic. We also increased our position in Telenet, the largest cable operator in Belgium, and we will consolidate this business in our financial results from January 1, 2007. As we look ahead, we will continue to evaluate potentially accretive M&A opportunities.”
“We are actively managing our balance sheet and remain focused on maintaining our target leverage and access to liquidity. We ended the year with $2.4 billion of cash (including restricted cash(7)) and had unused borrowing capacity throughout our consolidated subsidiaries of approximately $2.7 billion, subject to covenant compliance. We believe that our levered equity return strategy is a key advantage in driving shareholder value. Since the beginning of 2006, we have purchased in excess of $2.0 billion of our stock through open market purchases and tender offers, reducing our shares outstanding by approximately 17%. Additionally, today we are announcing an aggregate $500 million in modified dutch auction tender offers for our own stock, which we expect to launch on or shortly after March 6, 2007. We continue to believe that our stock is undervalued in relation to our growth prospects and, accordingly, will use excess cash to repurchase shares.”
Specifics on Tender Offers
We intend to purchase up to $500 million of our stock, consisting of approximately $250 million each of our Series A (LBTYA) and Series C (LBTYK) common stock at ranges of $28.20 to $31.00 for Series A and $26.65 to $29.35 for Series C. This represents an approximate 2% discount to an 8% premium to our closing share prices on Wednesday, February 28, 2007.
Operating Statistics
We had 19.4 million total RGUs at December 31, 2006, with 12.9 million video, 3.8 million broadband Internet and 2.7 million telephony subscribers. Our 12.9 million video subscribers consist of 9.7 million analog/MMDS(8), 2.2 million digital cable and 1.0 million DTH subscribers. In 2006, we added 2.5 million RGUs, driven by 1.63 million organic RGU additions (a 45% increase from our additions in 2005) and 0.9 million net additions through M&A activity. We achieved solid year-over-year growth across all three of our products, data, voice, and video, with advanced services including VoIP and digital video demonstrating notable success. In the fourth quarter, typically our strongest quarter of the year, we added 540,000 organic RGUs, which was a 23% improvement over the fourth quarter of 2005 and was a record quarter in terms of organic RGU additions.
In terms of 2006 organic RGU additions by product, we added 759,000 broadband Internet subscribers, 609,000 telephony subscribers and 263,000 video subscribers. Organic broadband Internet, telephony and video subscriber growth for the year increased 41%, 46% and 55%, respectively, from our additions for these categories in the prior year. As demonstrated consistently throughout the year, broadband Internet was our strongest performer in absolute terms, reflective of our successful “product leadership” strategy, which is to “meet on price and beat on speed.” During 2006, we improved aggregate broadband Internet penetration to 18% from 16% in 2005, led by increases in Chile and Europe.
We added 609,000 organic telephony subscribers in 2006, including 167,000 in the fourth quarter, with VoIP accounting for approximately 85% of our total organic telephony additions in 2006. In terms of our telephony footprint, we have 20.5 million homes serviceable, of which approximately 3.2 million homes were added
(6) In the Netherlands where our digital migration project is underway, a subscriber is moved from the analog cable subscriber count to the digital cable subscriber count when such subscriber accepts delivery of our digital converter box and agrees to accept digital video service regardless of when the subscriber begins to receive our digital video service. Through December 31, 2006, the digital video service and the digital converter box were provided at the analog rate for six months after which the subscriber had the option to discontinue the digital service or pay an additional amount to continue to receive the digital service. Effective January 1, 2007, this promotional period was reduced from six months to three months. An estimated 10% to 15% of the Netherlands digital cable subscribers at December 31, 2006 have accepted but not installed their digital converter boxes.
(7) Includes $481 million of restricted cash that is related to our debt instruments.
(8) Includes analog and digital MMDS subscribers.
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organically in 2006 and an additional 1.9 million through M&A activity. Of our total telephony homes serviceable, approximately 13 million are VoIP homes. With our VoIP launches in 2006 and our superior value proposition relative to incumbent phone companies, we are focused on driving aggregate telephony penetration higher from our current 13% penetration level.
In 2006, we experienced continued subscriber growth in our core video business, as we added 263,000 video subscribers. Of these additions, approximately 57% occurred in the fourth quarter, as the result of traditional seasonality and our fall marketing campaigns. In terms of breaking down our organic video additions, we added 979,000 digital cable (including conversions from analog) and 122,000 DTH subscribers in the year. Of the nearly one million digital cable additions, the Netherlands accounted for 43%, as a result of our D4A initiative. We added 79,000 digital subscribers in the fourth quarter in the Netherlands, which is comparable to our third quarter results and reflects our modified strategy to take a more selective approach with this program. Additionally, J:COM accounted for 32% of our organic digital cable additions, with 312,000 additions during 2006. Importantly, J:COM increased its digital penetration to 52% at year end 2006 from 37% at year end 2005. Overall, we had a 19% digital cable penetration of our total cable TV base at year end 2006, which was a 96% improvement over 2005.
Revenue
Our revenue for the three months and year ended December 31, 2006 was $1.79 billion and $6.49 billion, respectively. As compared to the same periods last year, these figures reflect growth rates of 39% and 44%, respectively. Excluding the effects of foreign currency (FX) movements, revenue increased 34% and 44% for the three months and year ended December 31, 2006, respectively, as compared to the same periods last year. As was the case throughout the year, our reported revenue increases continued to be principally driven by the impact of acquisitions, including Cablecom and Austar, and subscriber growth across our core operations.
We generated rebased revenue growth rates of 12% and 11% for the three months and year ended December 31, 2006 as compared to the same periods last year. This rebased growth was driven primarily by volume increases, as we continued to add subscribers throughout the year. As in previous quarters, our Western European operations continued to benefit from strong growth from Cablecom, which was aided by an analog price increase in early 2006. We also experienced solid growth in our Central and Eastern European (CEE), Japanese and Chilean operations.
In terms of average monthly revenue (ARPU)(9) per customer relationship, UPC Broadband, VTR and J:COM experienced solid growth compared to 2005. For the year ended December 31, 2006, ARPU per customer relationship for UPC Broadband was €20.27 ($25.43), reflecting an increase of 11% over 2005. The increase was driven by continued improvement in bundling, as well as the inclusion of Cablecom for two months in 2006. For the same period, ARPU per customer relationship for VTR increased by 8% to CLP 24,707 ($46.58), as VTR’s RGU per customer relationship ratio increased 13% to 1.79x from 1.58x at December 31, 2005. Additionally, J:COM generated ARPU per customer relationship of ¥7,333 ($63.02) for the year ended December 31, 2006, which was a modest increase of 2% over the prior year. Please see table on page 15 for additional information.
Operating Cash Flow
Driven by the impact of acquisitions, principally Cablecom, Austar and Cable West, strong organic growth, and substantial margin improvements, we generated operating cash flow for the three months and year ended December 31, 2006 of $631 million and $2.34 billion, respectively. As compared to the same periods last year, these figures reflect growth rates of 46% and 47%, respectively. Excluding FX movements, OCF increased 40% and 48% for the three months and year ended December 31, 2006, respectively, as compared to the same periods last year. Our results reflect rebased OCF growth rates of 18% and 16% for the three months and year ended December 31, 2006, respectively, as compared to the prior year periods. In particular, we experienced solid growth in Cablecom, CEE and VTR throughout the year.
(9) Average monthly revenue (ARPU) per customer relationship is calculated as follows: average total monthly subscription revenue (excluding installation and mobile telephony revenue) for the indicated period, divided by the average of the opening and closing customer relationships, as applicable, for the period. Customer relationships of entities acquired during the period are normalized.
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Our OCF margin(10) for the three months ended December 31, 2006 was 35.2%, which represents a 170 basis point improvement over our OCF margin from the same period last year. We achieved a 36.0% OCF margin for the full year 2006, which was a 90 basis improvement compared to 2005. Despite our record subscriber additions and their associated marketing and acquisition costs, we continue to see the benefit of scale in our business and are encouraged by our overall margin improvement. Margin improvement continued to be driven by Cablecom, CEE, Japan and Chile.
Loss from Continuing Operations and Net Earnings (Loss)
Our loss from continuing operations for the year ended December 31, 2006 was $334 million or $0.76 per basic and diluted share as compared to our loss of $60 million or $0.14 per basic and diluted share for the comparable period in 2005. In comparison to 2005, the loss was driven principally by higher interest expense and increased realized and unrealized losses on derivative instruments. On the positive side, our 2006 loss reflected higher operating income and gains on foreign currency transactions and dispositions of non-operating assets.
Including the impact of discontinued operations, we achieved net earnings of $706 million or $1.61 per basic and diluted share for the year ended December 31, 2006, as compared to a net loss of $80 million or $0.19 per basic and diluted share for the comparable period in 2005. We recognized $1.0 billion in gains from asset disposals in 2006, principally relating to the disposals of our cable operations in France, Sweden and Norway.
Capital Expenditures and Free Cash Flow
Capital expenditures and capital lease additions (capital expenditures unless otherwise noted) for the three months and year ended December 31, 2006 were $535 million and $1,658 million, respectively. As a percentage of revenue, capital expenditures were approximately 26% for the year ended December 31, 2006, representing a decrease from the prior year of approximately 100 basis points. Our capital expenditures increased in 2006 primarily as a result of higher subscriber additions, continued build-out and upgrade of our network in order to launch advanced services such as VoIP and digital video, and the integration of businesses acquired during the course of 2005 and 2006. We estimate that approximately 80% of our capital expenditures during 2006 were revenue generating and 20% pertained to support capital, such as information systems expenditures.
In terms of Free Cash Flow (FCF)(11), we generated positive FCF of $117 million and $127 million for the three months and year ended December 31, 2006, a decrease of $12 million and $76 million, respectively, as compared to the same periods last year. Excluding the FCF impact from discontinued operations, FCF for the three months and year ended December 31, 2006, would have been approximately $17 million and $81 million higher than the comparable periods in 2005. This increase was principally attributable to higher net cash provided by continuing operations.
Balance Sheet, Leverage and Liquidity
At December 31, 2006, total debt was $12.2 billion and cash and cash equivalents (including restricted cash) totaled $2.4 billion, resulting in net debt of $9.9 billion.(12) Total debt increased in the fourth quarter by approximately $1.0 billion, as a result of financings at Cablecom, J:COM and Chellomedia and the impact of foreign exchange rates, reflecting a general weakening of the U.S. dollar. Correspondingly, cash (including restricted cash) increased in the fourth quarter by approximately $0.8 billion, driven in part by excess cash from financings and positive working capital movements. For the fourth quarter of 2006, our gross and net leverage ratios, defined as total debt and net debt to last quarter annualized operating cash flow, were 4.8x and 3.9x, respectively.
In addition to our cash balances at December 31, 2006, approximately €137 million ($180 million) of the undrawn commitments under our €1.3 billion ($1.8 billion) in redrawable term loan facilities at UPC Broadband Holding B.V. (UPC Broadband Holding) are anticipated to be available for borrowing, upon completion of our fourth quarter bank reporting requirements, as is approximately ¥30 billion ($252 million)
(10) OCF margin is calculated by dividing OCF by total revenue for the applicable period.
(11) Free Cash Flow is defined as net cash provided by operating activities including net cash provided by discontinued operations less capital expenditures and capital lease additions. Please see page 15 for more information and the required reconciliation.
(12) Total debt includes capital lease obligations. Total cash includes $481 million of restricted cash that is related to our debt instruments. Net debt is defined as total debt less cash and cash equivalents including our restricted cash balances related to our debt instruments.
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of undrawn commitments under J:COM’s ¥30 billion revolver. Subject to their terms, the undrawn amounts under these facilities may also be borrowed to finance acquisitions. Our aggregate unused borrowing capacity at December 31, 2006, represented by the maximum availability under each of our applicable facilities (including those at UPC Broadband Holding, J:COM, VTR and Austar), without regard to covenant compliance calculations, was approximately $2.7 billion.
Please see schedules beginning on page 7 for more detailed information on our financial and operating performance.
About Liberty Global
Liberty Global is the leading international cable operator offering advanced video, voice, and Internet access services to connect its customers to the world of entertainment, communications and information. As of December 31, 2006, Liberty Global operated state-of-the-art broadband communications networks that served approximately 14 million customers in 16 countries (excluding Belgium) principally located in Europe, Japan, Chile, and Australia. Liberty Global’s operations also include significant media and programming businesses such as Jupiter TV in Japan and Chellomedia in Europe.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including with respect to our anticipated launch of modified dutch auction tender offers; our plans to upgrade analog customers to higher revenue generating advanced digital services, to increase the downstream speeds of our broadband Internet access services across most of our markets, and to increase our aggregate telephony penetration; our insights and expectations regarding competition in our markets; the impact of our M&A activity on our operations and financial performance; our anticipated borrowing availability after completion of our fourth quarter bank reporting requirements; 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, success of our digital migration project in the Netherlands, continued growth in services for digital television at reasonable cost, changes in technology, regulation and competition, our ability to achieve expected operational efficiencies and economies of scale, our ability to generate expected revenue and operating cash flow and achieve assumed margins, 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 Form 10-K. 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.
Additional Information
References in this press release to the tender offers are for informational purposes only and do not constitute an offer to buy, or the solicitation of an offer to sell, any shares. The full details of the tender offers, including complete instructions on how to tender shares, along with the letter of transmittal and related materials, are expected to be mailed to stockholders on or about March 6, 2007. Stockholders should carefully read the offer to purchase, the applicable letter of transmittal and other related materials when they are available because they will contain important information. Stockholders may obtain free copies, when available, of the Tender Offer Statement on Schedule TO, the offer to purchase and other documents that will be filed by Liberty Global with the U.S. Securities and Exchange Commission at the commission’s website at www.sec.gov. Stockholders also may obtain a copy of these documents, without charge, from D.F. King & Co., Inc., the information agent for the tender offers, by calling toll free 1-800-207-3158. Stockholders are urged to read these materials carefully prior to making any decision with respect to either or both tender offers.
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For more information, please visit www.lgi.com or contact:
Christopher Noyes | Hanne Wolf |
Investor Relations — Denver | Corporate Communications — Denver |
303.220.6693 | 303.220.6678 |
| |
Iván Nash Vila | Bert Holtkamp |
Investor Relations — Europe | Corporate Communications — Europe |
+41 44 277 9738 | +31 20 778 9447 |
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Footnotes for pages 20-21
(1) Homes Passed are homes that can be connected to our networks without further extending the distribution plant, except for direct-to-home (DTH) and Multi-channel Multipoint (microwave) Distribution System (MMDS) homes. Our Homes Passed counts are based on census data that can change based on either revisions to the data or from new census results. With the exception of Austar, we do not count homes passed for DTH. With respect to Austar, we count all homes in the areas that Austar is authorized to serve as Homes Passed. With respect to MMDS, one Home Passed is equal to one MMDS subscriber. Due to the fact that we do not own the partner networks (defined below) used by Cablecom in Switzerland, or the unbundled loop and shared access network used by INODE in Austria, we do not report homes passed for Cablecom’s partner networks or for INODE. See note 13 below.
(2) Two-way Homes Passed are Homes Passed by our networks where customers can request and receive the installation of a two-way addressable set-top converter, cable modem, transceiver and/or voice port which, in most cases, allows for the provision of video and Internet services and, in some cases, telephone services. Due to the fact that we do not own the partner networks used by Cablecom in Switzerland or the unbundled loop and shared access network used by INODE in Austria, we do not report two-way homes passed for Cablecom’s partner networks or for INODE.
(3) Customer Relationships are the number of customers who receive at least one level of service without regard to which service(s) they subscribe. We exclude mobile customers from customer relationships.
(4) Revenue Generating Unit is separately an Analog Cable Subscriber, Digital Cable Subscriber, DTH Subscriber, MMDS Subscriber, Internet Subscriber or Telephone Subscriber. A home may contain one or more RGUs. For example, if a residential customer in our Austrian system subscribed to our digital cable service, telephone service and broadband Internet access service, the customer would constitute three RGUs. Total RGUs is the sum of Analog Cable, Digital Cable, DTH, MMDS, Internet and Telephone Subscribers. In some cases, non-paying subscribers are counted as subscribers during their free promotional service period. Some of these subscribers choose to disconnect after their free service period.
(5) Analog Cable Subscriber is comprised of analog cable customers that are counted on a per connection or equivalent billing unit (EBU) basis. In Europe, we have approximately 748,400 “lifeline” customers that are counted on a per connection basis, representing the least expensive regulated tier of basic cable service, with only a few channels.
(6) Digital Cable Subscriber is a customer with one or more digital converter boxes that receives our digital video service. We count a subscriber with one or more digital converter boxes that receives our digital video service as just one subscriber. A Digital Cable Subscriber is not counted as an Analog Cable Subscriber. Subscribers to digital video services provided by Cablecom over partner networks receive analog video services from the partner networks as opposed to Cablecom. As we migrate customers from analog to digital video services, we report a decrease in our Analog Cable Subscribers equal to the increase in our Digital Cable Subscribers. In the Netherlands where our digital migration project is underway, a subscriber is moved from the Analog Cable Subscriber count to the Digital Cable Subscriber count when such subscriber accepts delivery of our digital converter box and agrees to accept digital video service regardless of when the subscriber begins to receive our digital video service. Through December 31, 2006, the digital video service and the digital converter box were provided at the analog rate for six months after which the subscriber had the option to discontinue the digital service or pay an additional amount to continue to receive the digital service. Effective January 1, 2007, this promotional period was reduced from six months to three months. An estimated 10% to 15% of the Netherlands Digital Cable Subscribers at December 31, 2006 have accepted but not installed their digital converter boxes.
(7) DTH Subscriber is a home or commercial unit that receives our video programming broadcast directly to the home via a geosynchronous satellite.
(8) MMDS Subscriber is a home or commercial unit that receives our video programming via a multi—channel multipoint (microwave) distribution system.
(9) Internet Homes Serviceable are homes that can be connected to our broadband networks, or a partner network with which we have a service agreement, where customers can request and receive broadband Internet access services. With respect to INODE, we do not report Internet homes serviceable as INODE’s service is not delivered over our network but instead is delivered over an unbundled loop, or in certain cases, over a shared access network.
(10) Internet Subscriber is a home or commercial unit or EBU with one or more cable modem connections to our broadband networks, or that we service through a partner network, where a customer has requested and is receiving broadband Internet access services. At December 31, 2006, our Internet Subscribers in Austria included 89,200 residential digital subscriber lines or DSL subscribers of INODE that are not serviced over our networks. Our Internet Subscribers do not include customers that receive services via resale arrangements or from dial-up connections.
(11) Telephone Homes Serviceable are homes that can be connected to our networks, or a partner network with which we have a service agreement, where customers can request and receive voice services. With respect to INODE, we do not report telephone homes serviceable as service is delivered over an unbundled loop rather than our network.
(12) Telephone Subscriber is a home or commercial unit or EBU connected to our networks, or that we service through a partner network, where a customer has requested and is receiving voice services. Telephone Subscribers as of December 31, 2006, exclude an aggregate of 149,100 mobile telephone subscribers in the Netherlands and Australia. Also, our Telephone Subscribers do not include customers that receive services via resale arrangements. At December 31, 2006, our Telephone Subscribers in Austria included 22,600 residential subscribers of INODE.
(13) Pursuant to service agreements, Cablecom offers digital video, broadband Internet access and telephony services over networks owned by third party cable operators or “partner networks” . A partner network RGU is only recognized if Cablecom has a direct billing relationship with the customer. Homes Serviceable for partner networks represent the estimated number of homes that are technologically capable of receiving the applicable service within the geographic regions covered by Cablecom’s service agreements. Internet and Telephone Homes Serviceable and Customer Relationships with respect to partner networks have been estimated by Cablecom. These estimates may change in future periods as more accurate information becomes available. Cablecom’s partner network information generally is presented one quarter in arrears such that information included in our December 31, 2006 subscriber table is based on September 30, 2006 data. In our December 31, 2006 subscriber table, Cablecom’s partner networks account for 46,000 Customer Relationships, 74,800 RGUs, 20,100 Digital Cable Subscribers, 148,800 Internet and Telephone Homes Serviceable, 35,000 Internet Subscribers, and 19,700 Telephone Subscribers. In addition, partner networks account for 490,000 digital video homes serviceable that are not included in Homes Passed or Two-way Homes Passed in our December 31, 2006 subscriber table.
(14) Our organic RGU growth for the fourth quarter of 2006 does not include organic growth for Karneval due to the fact that we did not manage Karneval during this period. Additionally, the subscriber statistics of Cable West as of the September 30, 2006 acquisition date have been estimated based on (i) the fourth quarter 2006 net additions that would have been reported under Cable West’s pre-acquisition subscriber counting policies and (ii) the December 31, 2006 subscriber statistics of Cable West, as adjusted to comply with J:COM’s subscriber counting policies.
Additional General Notes to Tables:
With respect to Chile, Japan and Puerto Rico, residential multiple dwelling units with a discounted pricing structure for video, broadband Internet or telephony services are counted on an EBU basis. With respect to commercial establishments, such as bars, hotels and hospitals, to which we provide video and other services primarily for the patrons of such establishments, the subscriber count is generally calculated on an EBU basis by our subsidiaries. EBU is 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. On a business-to-business basis, certain of our subsidiaries provide data, telephony and other services to businesses, primarily in the Netherlands, Switzerland, Austria, Ireland and Romania. We generally do not count customers of these services as subscribers, customers or RGUs.
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 adds 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. 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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