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 December 31, 2023, our reportable segments are as follows: Consolidated: • Sunrise • Telenet • VM Ireland Nonconsolidated: • VMO2 JV • VodafoneZiggo JV On June 1, 2021, we completed the U.K. JV Transaction, whereby we contributed the U.K. JV Entities to the VMO2 JV. Prior to the completion of the U.K. JV Transaction, we presented Virgin Media U.K., together with VM Ireland, as a single reportable segment, “U.K./Ireland” . In connection with the completion of the U.K. JV Transaction, we restated our segment presentation for all periods to separately present (i) Virgin Media U.K. and (ii) VM Ireland. In addition, certain other less significant entities previously included in the U.K./Ireland segment are now included within Central and Other (as defined below). Following the closing of the U.K. JV Transaction, we identified the VMO2 JV as a nonconsolidated reportable segment. For additional information regarding the U.K. JV Transaction, see note 6. 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) services provided to the VMO2 JV, the VodafoneZiggo JV and various third parties related to transitional service agreements, (ii) sales of CPE to the VodafoneZiggo JV, (iii) certain centralized functions, including billing systems, network operations, technology, marketing, facilities, finance and other administrative functions and (iv) our operations in Slovakia. 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 of these changes, 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 resulted in a change 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. Year ended December 31, 2023 2022 2021 in millions Increase (decrease) to revenue (a): Central and Other $ 243.9 $ 237.5 $ 266.7 Intersegment eliminations (243.9) (237.5) (266.7) Total $ — $ — $ — Increase (decrease) to Adjusted EBITDA (b): Sunrise $ (65.0) $ (40.0) $ (44.3) Telenet (8.8) (8.5) (9.6) VM Ireland (23.9) (13.9) (16.0) Central and Other 158.5 121.7 136.4 Intersegment eliminations (60.8) (59.3) (66.5) Total $ — $ — $ — Increase (decrease) to property and equipment additions (c): Sunrise $ 22.8 $ 22.2 $ 24.9 Telenet 27.7 27.0 30.3 VM Ireland 10.3 10.1 11.3 Central and Other — — — Intersegment eliminations (60.8) (59.3) (66.5) 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 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 year ended December 31, 2023, revenue within our Central and Other category was reduced by $127.7 million as a result of this change and the associated accounting treatment, including $69.3 million and $41.0 million from the VMO2 JV and the VodafoneZiggo JV, respectively. As of December 31, 2023, the net book value of our existing internally-developed software was reduced to zero. 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 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 consolidated statements of operations. Year ended December 31, 2023 2022 (a) 2021 (a) Revenue Adjusted EBITDA Revenue Adjusted EBITDA Revenue Adjusted EBITDA in millions Sunrise $ 3,380.4 $ 1,148.5 $ 3,180.9 $ 1,097.8 $ 3,321.9 $ 1,164.4 Telenet 3,089.2 1,315.2 2,807.3 1,299.6 3,065.9 1,472.2 VM Ireland 506.1 181.4 494.7 183.6 550.0 202.6 Virgin Media U.K. (b) — — — — 2,736.4 1,085.3 Central and Other 775.7 (214.7) 959.9 74.7 915.4 103.3 Intersegment eliminations (c) (260.0) (60.8) (247.1) (60.3) (278.3) (64.7) Total $ 7,491.4 $ 2,369.6 $ 7,195.7 $ 2,595.4 $ 10,311.3 $ 3,963.1 VMO2 JV (d) $ 13,574.1 $ 4,531.3 $ 12,857.2 $ 4,562.2 $ 8,522.9 $ 2,716.6 VodafoneZiggo JV $ 4,450.5 $ 1,972.5 $ 4,284.6 $ 2,018.0 $ 4,824.2 $ 2,265.6 _______________ (a) Amounts have been revised, as applicable, to reflect the retrospective impact of the Tech Framework, as described above. (b) Amounts represent the revenue and Adjusted EBITDA of the U.K. JV Entities through the June 1, 2021 closing of the U.K. JV Transaction. (c) Amounts primarily relate to (i) the revenue recognized within our T&I Function related to the Tech Framework, (ii) 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 (iii) for 2022 and 2021, transactions between our continuing and discontinued operations. (d) The 2021 amounts represent the revenue and Adjusted EBITDA of the VMO2 JV for the period beginning June 1, 2021. The following table provides a reconciliation of earnings (loss) from continuing operations to Adjusted EBITDA: Year ended December 31, 2023 2022 2021 in millions Earnings (loss) from continuing operations $ (3,873.8) $ 1,105.3 $ 13,527.5 Income tax expense 149.6 318.9 473.3 Other income, net (225.5) (134.4) (44.9) Gain on AtlasEdge JV Transactions — — (227.5) Gain on U.K. JV Transaction — — (10,873.8) Gain on Telenet Tower Sale — (700.5) — Gain associated with the Telenet Wyre Transaction (377.8) — — Share of results of affiliates, net 2,019.3 1,267.8 175.4 Losses (gains) on debt extinguishment, net 1.4 (2.8) 90.6 Realized and unrealized losses (gains) due to changes in fair values of certain investments, net 557.3 323.5 (820.6) Foreign currency transaction losses (gains), net 70.8 (1,407.2) (1,324.5) Realized and unrealized losses (gains) on derivative instruments, net 526.3 (1,213.1) (537.3) Interest expense 907.9 589.3 882.1 Operating income (loss) (244.5) 146.8 1,320.3 Impairment, restructuring and other operating items, net 67.9 85.1 (19.0) Depreciation and amortization 2,315.2 2,171.4 2,353.7 Share-based compensation expense 231.0 192.1 308.1 Adjusted EBITDA $ 2,369.6 $ 2,595.4 $ 3,963.1 Balance Sheet Data of our Reportable Segments Selected balance sheet data of our reportable segments is set forth below: Long-lived assets Total assets December 31, December 31, 2023 2022 (a) 2023 2022 (a) in millions Sunrise $ 11,604.0 $ 10,950.4 $ 13,992.2 $ 13,133.0 Telenet 7,137.1 5,779.0 9,801.5 8,917.5 VM Ireland 932.0 813.2 1,183.6 1,084.9 Central and Other 339.6 717.4 17,229.5 19,853.6 Intersegment eliminations (118.9) (94.0) (118.9) (94.0) Total $ 19,893.8 $ 18,166.0 $ 42,087.9 $ 42,895.0 VMO2 JV $ 39,073.2 $ 41,087.5 $ 48,039.4 $ 49,809.3 VodafoneZiggo JV $ 17,725.3 $ 17,845.3 $ 19,714.1 $ 20,211.9 _______________ (a) Amounts have been revised, as applicable, to reflect the retrospective impact of the Tech Framework, as described above. 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 consolidated statements of cash flows. For additional information concerning capital additions financed under vendor financing and finance lease arrangements, see notes 10 and 12, respectively. Year ended December 31, 2023 2022 (a) 2021 (a) in millions Sunrise $ 586.4 $ 597.9 $ 634.8 Telenet 746.6 643.0 603.8 VM Ireland 176.7 147.4 105.7 Virgin Media U.K. (b) — — 557.4 Central and Other (c) 129.1 259.9 334.3 Intersegment eliminations (d) (60.8) (59.3) (66.5) Total property and equipment additions 1,578.0 1,588.9 2,169.5 Assets acquired under capital-related vendor financing arrangements (178.4) (182.8) (661.1) Assets acquired under finance leases (20.9) (34.2) (42.6) Changes in current liabilities related to capital expenditures 7.3 (68.7) (57.8) Total capital expenditures, net $ 1,386.0 $ 1,303.2 $ 1,408.0 Property and equipment additions: VMO2 JV (e) $ 2,478.9 $ 2,785.0 $ 1,706.4 VodafoneZiggo JV $ 989.8 $ 999.3 $ 990.5 _______________ (a) Amounts have been revised, as applicable, to reflect the retrospective impact of the Tech Framework, as described above. (b) Amount represents the property and equipment additions of the U.K. JV Entities through the June 1, 2021 closing of the U.K. JV Transaction. (c) Includes (i) property and equipment additions representing centrally-owned assets that benefit our operating segments, including development costs related to our internally-developed software prior to our decision to externally market such software, (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. (d) 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. (e) The 2021 amount represents the property and equipment additions of the VMO2 JV for the period beginning June 1, 2021. Revenue by Major Category Our revenue by major category for our consolidated reportable segments is set forth below: Year ended December 31, 2023 2022 2021 in millions Residential revenue: Residential fixed revenue (a): Subscription revenue (b): Broadband internet $ 1,491.0 $ 1,378.2 $ 2,371.7 Video 1,091.3 1,077.4 1,831.8 Fixed-line telephony 359.6 381.4 841.1 Total subscription revenue 2,941.9 2,837.0 5,044.6 Non-subscription revenue 69.2 46.3 98.9 Total residential fixed revenue 3,011.1 2,883.3 5,143.5 Residential mobile revenue (c): Subscription revenue (b) 1,519.3 1,401.4 1,630.7 Non-subscription revenue 550.9 543.7 760.8 Total residential mobile revenue 2,070.2 1,945.1 2,391.5 Total residential revenue 5,081.3 4,828.4 7,535.0 B2B revenue (d): Subscription revenue 561.7 515.1 619.0 Non-subscription revenue 934.9 861.7 1,243.8 Total B2B revenue 1,496.6 1,376.8 1,862.8 Other revenue (e) 913.5 990.5 913.5 Total $ 7,491.4 $ 7,195.7 $ 10,311.3 _______________ (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 at Telenet, VM Ireland and Sunrise, (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: Year ended December 31, 2023 2022 2021 in millions Switzerland $ 3,380.4 $ 3,180.9 $ 3,321.9 Belgium 2,948.2 2,807.3 3,065.9 Ireland 506.1 494.7 550.0 U.K. (a) — — 2,736.4 Slovakia 51.8 49.9 52.3 Other, including intersegment eliminations (b) 604.9 662.9 584.8 Total $ 7,491.4 $ 7,195.7 $ 10,311.3 VMO2 JV (U.K.) (c) $ 13,574.1 $ 12,857.2 $ 8,522.9 VodafoneZiggo JV (Netherlands) $ 4,450.5 $ 4,284.6 $ 4,824.2 _______________ (a) Amount represents the revenue of the U.K. JV Entities through the June 1, 2021 closing of the U.K. JV Transaction. (b) 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. (c) The 2021 amount represents the revenue of the VMO2 JV for the period beginning June 1, 2021. The long-lived assets of our geographic segments are set forth below: December 31, 2023 2022 (a) in millions Switzerland $ 11,604.0 $ 10,950.4 Belgium 7,087.6 5,779.0 Ireland 932.0 813.2 Slovakia 118.2 116.5 Other (b) 270.9 600.9 Intersegment eliminations (118.9) $ (94.0) Total $ 19,893.8 $ 18,166.0 VMO2 JV (U.K.) $ 39,073.2 $ 41,087.5 VodafoneZiggo JV (Netherlands) $ 17,725.3 $ 17,845.3 _______________ (a) Amounts have been revised, as applicable, to reflect the retrospective impact of the Tech Framework, as described above. |