Liberty Global Reports Q3 2024 Results

Business Wire 29-Oct-2024 4:01 PM

Sequential improvement in aggregate broadband & postpaid mobile net adds across all markets; fiber deployments ramping in U.K. & Belgium

On track to achieve all full-year guidance targets¹, including Sunrise Adjusted Free Cash Flow guidance refined at Capital Markets Day

Sunrise spin approved at EGM (99% in favor) with distribution set for November 12th; planned debt paydown of CHF 1.5b

Next phase of value creation post the Sunrise spin, focused on managing telecom assets for the benefit of shareholders and rotating capital into these transactions and new growth opportunities

Liberty Global Ltd. today announced its Q3 2024 financial results.

CEO Mike Fries stated, "It was a solid quarter for our telco business operationally with sequential improvement across all markets in aggregate mobile postpaid and broadband net adds in Q3, as we begin seeing the benefits of the AI and digital tools that we're deploying to enhance the customer experience. Our fiber deployments are scaling effectively as we ramp our nexfibre and Fibre Up efforts in the U.K. along with Wyre's FTTH build across Flanders.

Meanwhile, we continue making significant progress on the strategies we've undertaken to unlock shareholder value. The 100% spin-off of Sunrise has been confirmed for November 12th, only nine months after announcement. We've injected $1.4 billion of capital into Sunrise which, together with Adj FCF generated at Sunrise, will achieve $1.7 billion of total deleveraging by year-end. We anticipate a CHF 240 million dividend to be paid by Sunrise in mid-2025, followed by a progressive annual dividend policy thereafter.

In terms of our Liberty Growth portfolio (previously referred to as Ventures), we will continue rotating capital out of low-growth businesses into new opportunities with secular tailwinds and scale-driven characteristics. Following a further divestment of our U.K. tower business (CTIL), as well as monetizations of our Pax8 and EdgeConnex technology investments, we expect to realize ~$900 million² in total asset proceeds from the transactions we've announced over the last twelve months, near the top end of our $500 million to $1 billion target range. In October we increased our stake in Formula E to 66% and will begin consolidating the world's fastest growing motorsport from Q4.

In early October, VodafoneZiggo successfully completed a proactive refinancing of its 2027 maturities; our telecom businesses have no material debt repayments until 2028, and the average life of our debt stands at ~5 years³. At September 30, we had $3.5 billion⁽ⁱ⁾ of cash on our balance sheet, which is expected to be ~$2 billion at year end, after the $1.4 billion capital injection into Sunrise. In addition to the fast-approaching Sunrise spin, 2024 will prove to be an exceptional year for returns to Liberty Global shareholders, as we've also acquired ~8% of our outstanding shares through October 25 against our 10% target by year-end. Our strategic focus going forward will remain squarely on unlocking the underlying value of our substantial asset base."

Q3 Operating Company Highlights

Sunrise (Consolidated)

Sunrise delivers another quarter of positive broadband net adds and accelerating mobile postpaid growth

Operating highlights: During Q3, Sunrise delivered a third consecutive quarter of broadband growth, achieving 1,300 net adds, primarily driven by reduced churn on the main brand. In mobile, growth in postpaid accelerated, as Sunrise delivered 43,200 postpaid net adds, supported by an improved main brand performance and reduced churn. FMC penetration of 59% across the Sunrise broadband base continues to grow steadily, increasing 1.1% YoY. The spin-off date has been confirmed for November 12.

Financial highlights: Revenue of $865.7 million in Q3 2024 increased 0.7% YoY on a reported basis and decreased 1.3% on a rebased⁴ basis. The rebased decrease was mainly due to (i) continued rightpricing efforts and (ii) a decrease in mobile roaming revenue, partially offset by (a) continued momentum in B2B and (b) growth in flanker brands. Adjusted EBITDA increased 2.5% YoY on a reported basis and 0.3% on a rebased basis to $318.9 million in Q3 2024, including $1 million of costs to capture⁵. The rebased increase was mainly due to the aforementioned decline in revenue, partially offset by (1) lower costs to capture and (2) a decrease in labor costs. Adjusted EBITDA less P&E Additions of $190.4 million in Q3 increased 8.4% YoY on a reported basis and 5.9% on a rebased basis, including $3 million of opex and capex costs to capture.

Telenet (Consolidated)

Telenet delivers strong financial results and an improved trend in operating performance

Operating highlights: During Q3, Telenet delivered growth in postpaid mobile net adds of 800 despite an intensely competitive market environment. The broadband base contracted by 4,000 during the quarter. The improved sequential performance was driven by the nationwide launch of Telenet's BASE FMC offer in June and the continued focus on customer centricity. FMC penetration remained stable at 50%.

Financial highlights: Revenue of $785.2 million in Q3 2024 increased 1.3% YoY on a reported basis and 0.3% on a rebased basis. The rebased increase was primarily driven by the net effect of (i) the one-off impact of the recognition of previously deferred revenue of approximately $18 million during Q3 2024, (ii) a decrease in mobile revenue driven by lower interconnect revenue and handset sales and (iii) a decrease in B2B wholesale revenue following the loss of the VOO MVNO contract. Adjusted EBITDA increased 6.2% YoY on a reported basis and 5.2% on a rebased basis to $360.9 million in Q3, primarily due to continued cost control and the aforementioned one-off impact of the recognition of previously deferred revenue, partially offset by (a) higher staff-related expenses and (b) an increase in sales and marketing costs. Reported and rebased Adjusted EBITDA less P&E Additions decreased 17.5% and 18.2%, respectively, to $134.3 million in Q3.

VMO2 (Non-consolidated Joint Venture)

VMO2 continues targeted investments and reaffirms 2024 guidance

Operating highlights: VMO2 delivered on both volume and value in Q3, with a return to positive fixed customer net adds of 15,000 and fixed ARPU growth of 2.2% YoY. Targeted investment in sales and marketing drove an increase of over 40% in gross additions in the nexfibre expansion footprint compared to Q2, while the VMO2 existing footprint remained broadly stable with a modest loss in the quarter. In mobile, the postpaid base declined modestly by 15,300. The sequential improvement was driven by a reduction in churn. Fiber build pace increased by 44% in the first nine months of 2024 compared to 2023, and during Q3 the total serviceable footprint grew by 281,100 homes, principally through build on behalf of nexfibre. This includes the transfer of the first Upp premises from VMO2 to nexfibre following the acquisition of the altnet in 2023 and the successful completion of integration work, with the majority of the 175,000 acquired premises still to be transferred. During the quarter, VMO2 and Vodafone reached a new long-term partnership with Cellnex UK to provide both Mobile Network Operators with tower infrastructure and associated services.

Financial highlights (in U.S. GAAP)⁶: Revenue¹¹ of $3,512.7 million in Q3 2024 increased 0.3% YoY on a reported basis and decreased 2.4% YoY on a rebased basis. The rebased decrease was primarily due to the net effect of (i) a decrease in mobile revenue due to lower handset sales, (ii) an increase in residential fixed revenue and (iii) a one-time increase in Q3 2023 of $48 million due to a change in the contract terms with a related-party supplier, with each revenue category as defined and reported by the VMO2 JV. Q3 Adjusted EBITDA¹¹ was flat YoY on a reported basis and decreased 2.7% YoY on a rebased basis to $1,170.9 million, including $11 million of opex costs to capture. The YoY decrease in Adjusted EBITDA was primarily due to the net effect of (a) a benefit of approximately $18 million during Q3 2024 related to higher capitalized costs by the VMO2 JV due to a change in the terms of a related-party contract and (b) the aforementioned one-time revenue increase in Q3 2023. Q3 Adjusted EBITDA less P&E Additions¹¹ was flat YoY on a reported basis and decreased 2.7% YoY on a rebased basis to $483.1 million, including $38 million of opex and capex costs to capture.

Financial highlights (in IFRS): Revenue of £2,701.8 million ($3,512.7 million) in Q3 2024 decreased 2.4% YoY on a rebased basis. Q3 Adjusted EBITDA of £994.0 million ($1,292.0 million), including costs to capture, decreased 2.9% YoY on a rebased basis. Q3 Adjusted EBITDA less P&E Additions of £178.2 million ($235.7 million), including costs to capture, decreased 58.0% YoY on a rebased basis. The drivers of these IFRS changes are largely consistent with those under U.S. GAAP detailed above.

For more information regarding the VMO2 JV, including full IFRS disclosures, please visit its investor relations page to access the Q3 earnings release.

VodafoneZiggo (Non-consolidated Joint Venture)

VodafoneZiggo delivers a Q3 performance in line with expectations and reconfirms 2024 guidance

Operating highlights: During Q3, mobile postpaid net adds grew by 2,300, driven by improved sales. The broadband base contracted by 20,400 in the quarter, as a 25,500 decline in Consumer was only partially offset by a 5,100 increase in B2B. Both mobile and fixed ARPU continued to grow in the quarter, supported by the benefit of the mobile price indexation implemented in October 2023 and the fixed price indexation in July. The FMC⁷ broadband households penetration increased to 49%.

Financial highlights: Revenue increased 0.5% YoY on a reported basis and decreased 0.5% YoY on a rebased basis to $1,131.1 million in Q3. The rebased decrease was primarily due to a decline in the B2C fixed customer base, partially offset by growth in mobile and B2B revenue. Adjusted EBITDA increased 1.8% YoY on a reported basis and 0.8% on a rebased basis to $527.8 million in Q3. The rebased increase was primarily driven by (i) cost control measures in customer service, IT, procurement and business contracting services and (ii) lower energy costs, partially offset by (a) higher programming costs related to the UEFA broadcast, (b) wage increases related to the collective labor agreement and (c) the aforementioned decrease in revenue. Adjusted EBITDA less P&E Additions increased 8.6% YoY on a reported basis and 7.5% on a rebased basis to $312.1 million in Q3.

Liberty Global Consolidated Q3 Highlights

• Q3 revenue increased 4.4% YoY on a reported basis and 2.6% on a rebased basis to $1,935.2 million
• Q3 net earnings (loss) decreased 271.5% YoY on a reported basis to ($1,410.9 million)
• Q3 Adjusted EBITDA increased 11.8% YoY on a reported basis and 9.4% on a rebased basis to $668.3 million
• Q3 property and equipment additions were 19.9% of revenue, as compared to 19.7% in Q3 2023
• Balance sheet with $5.0 billion of total liquidity⁸
  • Comprised of $2.4 billion of cash, $1.1 billion of investments held under SMAs and over $1.5 billion of unused borrowing capacity⁹
• Blended, fully-swapped borrowing cost of 3.44% on a debt balance of $16.0 billion

Customer Growth

______________________

Net earnings (loss)

Net earnings (loss) was ($1,410.9 million) and $822.7 million for the three months ended September 30, 2024 and 2023, respectively, and ($608.7 million) and ($402.1 million) for the nine months ended September 30, 2024 and 2023, respectively.

Financial Highlights

The following tables present (i) Revenue, Adjusted EBITDA and Adjusted EBITDA less P&E Additions for each of our reportable segments, including the non-consolidated VMO2 JV and VodafoneZiggo JV, for the comparative periods and (ii) the percentage change from period to period on both a reported and rebased basis. Consolidated Adjusted EBITDA and Consolidated Adjusted EBITDA less P&E Additions are non-GAAP measures. For additional information on how these measures are defined and why we believe they are meaningful, see the Glossary.

_______________

_______________

_______________

Leverage and Liquidity

• Total principal amount of debt and finance leases: $16.0 billion
• Average debt tenor¹⁰: 4.1 years, with ~10% not due until 2030 or thereafter
• Borrowing costs: Blended, fully-swapped cost of debt was 3.4%
• Liquidity: $5.0 billion, including (i) $2.4 billion of cash at September 30, 2024, (ii) $1.1 billion of investments held under SMAs and (iii) $1.5 billion of aggregate unused borrowing capacity under our credit facilities

Forward-Looking Statements and Disclaimer

This press release 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; expectations regarding our and our businesses' financial performance, including Revenue and Rebased Revenue, Adjusted EBITDA, Adjusted EBITDA less P&E Additions, operating and capital expenses, property and equipment additions, Adjusted Free Cash Flow, Distributable Cash Flow and ARPU metrics, as well as our and our operating companies' 2024 financial guidance, including revisions, provided by us and our operating companies and joint ventures, which includes expected capital intensity; our future strategies for maximizing and creating value for our shareholders; the anticipated spin-off of our Swiss operating company, Sunrise, including the timing of the transaction and the timing, amount and use of funds by Sunrise from the capital injection to be made by Liberty Global, as well as any anticipated dividends to be paid from Sunrise and the timing thereof; the expected drivers of future operational and financial performance at our operating companies and our joint ventures, including the use of AI technologies; our, our affiliates' and our joint ventures' plans with respect to networks, products and services and the investments in such networks, products and services, including the planned fiber upgrade programs in the U.K. and Belgium; expectations with respect to VMO2's partnership with Vodafone and Cellnex UK and the timing, costs and expected benefits to be derived therefrom; our strategic plans for our Liberty Growth portfolio (previously referred to as the Ventures portfolio), including any expected capital rotation between investments and the proceeds to be received therefrom; our share repurchase program, including the amount of shares we intend to repurchase during the year; the strength of our and our affiliates' respective balance sheets (including cash and liquidity position); the tenor and cost of our third-party debt and anticipated borrowing capacity, including at Sunrise following its spin-off from Liberty Global; 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 events that are outside of our control, such as the continued use by subscribers and potential subscribers of our and our affiliates' and joint ventures' services and their willingness to upgrade to our more advanced offerings; our, our affiliates' and our joint ventures' ability to meet challenges from competition, to manage rapid technological change or to maintain or increase rates to subscribers or to pass through increased costs to subscribers; the potential impact of pandemics and epidemics on us and our businesses as well as our customers; the effects of changes in laws or regulations; the effects of the U.K.'s exit from the E.U.; general economic factors; our, our affiliates' and our joint ventures' ability to obtain regulatory approval and satisfy regulatory conditions associated with acquisitions and dispositions; our, our affiliates' and our joint ventures' ability to successfully acquire and integrate new businesses and realize anticipated efficiencies from acquired businesses; the availability of attractive programming for our, our affiliates' and our joint ventures' video services and the costs associated with such programming; our, our affiliates' and our joint ventures' ability to achieve forecasted financial and operating targets; the outcome of any pending or threatened litigation; the ability of our operating companies and affiliates and joint ventures to access the cash of their respective subsidiaries; the impact of our operating companies', affiliates' and joint ventures' 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, vendors and contractors to timely deliver quality products, equipment, software, services and access; our, our affiliates' and our joint ventures' ability to adequately forecast and plan future network requirements including the costs and benefits associated with network expansions and upgrades; and other factors detailed from time to time in our filings with the Securities and Exchange Commission (the "SEC"), including our most recently filed Form 10-K, Form 10-K/A and Form 10-Qs. These forward-looking statements speak only as of the date of this release. 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.

Share Repurchase Program

Our share buyback plan for 2024 authorized the repurchase of up to 10% of our outstanding shares as of December 31, 2023. Under the program, Liberty Global may acquire from time to time its Class A common shares, Class C common shares, or any combination of Class A and Class C ordinary shares. The program may be effected through open market transactions and/or privately negotiated transactions, which may include derivative transactions. The timing of the repurchase of shares pursuant to the program will depend on a variety of factors, including market conditions and applicable law. The program may be implemented in conjunction with brokers for Liberty Global and other financial institutions with whom Liberty Global has relationships within certain pre-set parameters, and purchases may continue during closed periods in accordance with applicable restrictions. The program may be suspended or discontinued at any time and will terminate upon repurchasing the authorized limits unless further repurchase authorization is provided for.

About Liberty Global

Liberty Global (NASDAQ:LBTYA, LBTYB and LBTYK)) is a world leader in converged broadband, video and mobile communications services. We deliver next-generation products through advanced fiber and 5G networks, and currently provide over 85 million* connections across Europe. Our businesses operate under some of the best-known consumer brands, including Sunrise in Switzerland, Telenet in Belgium, Virgin Media in Ireland, UPC in Slovakia, Virgin Media-O2 in the U.K. and VodafoneZiggo in The Netherlands. Through our substantial scale and commitment to innovation, we are building Tomorrow's Connections Today, investing in the infrastructure and platforms that empower our customers to make the most of the digital revolution, while deploying the advanced technologies that nations and economies need to thrive.

Liberty Global's consolidated businesses generate annual revenue of more than $7 billion, while the VMO2 JV and the VodafoneZiggo JV generate combined annual revenue of more than $18 billion.**

Liberty Global Ventures, our global investment arm, has a portfolio of more than 75 companies and funds across the content, technology and infrastructure industries, including stakes in companies like ITV, Televisa Univision, Plume, AtlasEdge and the Formula E racing series.

* Represents aggregate consolidated and 50% owned non-consolidated fixed and mobile subscribers. Includes wholesale mobile connections of the VMO2 JV and B2B fixed subscribers of the VodafoneZiggo JV.

** Revenue figures above are provided based on full year 2023 Liberty Global consolidated results and the combined as reported full year 2023 results for the VodafoneZiggo JV and full year 2023 U.S. GAAP results for the VMO2 JV.

Sunrise, Telenet, the VMO2 JV and the VodafoneZiggo JV deliver mobile services as mobile network operators. Virgin Media Ireland delivers mobile services as a mobile virtual network operator through third-party networks. UPC Slovakia delivers mobile services as a reseller of SIM cards.

Liberty Global Ltd. is listed on the Nasdaq Global Select Market under the symbols "LBTYA", "LBTYB" and "LBTYK".

Balance Sheets, Statements of Operations and Statements of Cash Flows

The condensed consolidated balance sheets, statements of operations and statements of cash flows of Liberty Global are in our 10-Q.

Rebase Information

Rebase growth percentages, which are non-GAAP measures, are presented as a basis for assessing growth rates on a comparable basis. For purposes of calculating rebase growth rates on a comparable basis for all businesses that we owned during 2024, we have adjusted our historical revenue, Adjusted EBITDA and Adjusted EBITDA less P&E Additions for the three and nine months ended September 30, 2023 to (i) include the pre-acquisition revenue, Adjusted EBITDA and P&E Additions to the same extent these entities are included in our results for the three and nine months ended September 30, 2024, (ii) exclude from our rebased amounts the revenue, Adjusted EBITDA and P&E Additions of entities disposed of to the same extent these entities are excluded in our results for the three and nine months ended September 30, 2024, (iii) include in our rebased amounts the revenue and costs for the temporary elements of transitional and other services provided to iliad, Vodafone and Deutsche Telekom, to reflect amounts related to these services equal to those included in our results for the three and nine months ended September 30, 2024 and (iv) reflect the translation of our rebased amounts at the applicable average foreign currency exchange rates that were used to translate our results for the three and nine months ended September 30, 2024. We have reflected the revenue, Adjusted EBITDA and P&E Additions of these acquired entities in our 2023 rebased amounts based on what we believe to be the most reliable information that is currently available to us (generally pre-acquisition financial statements), as adjusted for the estimated effects of (a) any significant differences between U.S. GAAP and local generally accepted accounting principles, (b) any significant effects of acquisition accounting adjustments, (c) any significant differences between our accounting policies and those of the acquired entities and (d) other items we deem appropriate. We do not adjust pre-acquisition periods to eliminate nonrecurring items or to give retroactive effect to any changes in estimates that might be implemented during post-acquisition periods. As we did not own or operate the acquired businesses during the pre-acquisition periods, no assurance can be given that we have identified all adjustments necessary to present the revenue, Adjusted EBITDA and Adjusted EBITDA less P&E Additions of these entities on a basis that is comparable to the corresponding post-acquisition amounts that are included in our results or that the pre-acquisition financial statements we have relied upon do not contain undetected errors. In addition, the rebase growth percentages are not necessarily indicative of the revenue, Adjusted EBITDA and Adjusted EBITDA less P&E Additions that would have occurred if these transactions had occurred on the dates assumed for purposes of calculating our rebased amounts or the revenue, Adjusted EBITDA and Adjusted EBITDA less P&E Additions that will occur in the future. Investors should view rebase growth as a supplement to, and not a substitute for, U.S. GAAP measures of performance included in our condensed consolidated statements of operations.

The following table provides adjustments made to the 2023 amounts (i) in aggregate for our consolidated reportable segments and (ii) for the non-consolidated VMO2 JV and VodafoneZiggo JV to derive our rebased growth rates:

_______________

Liquidity

The following table⁽ⁱ⁾ details the U.S. dollar equivalents of our liquidity position at September 30, 2024, which includes our (i) cash and cash equivalents, (ii) investments held under SMAs and (iii) unused borrowing capacity:

_______________

Summary of Debt & Finance Lease Obligations

The following table⁽ⁱ⁾ details the September 30, 2024 U.S. dollar equivalents of the (i) outstanding principal amounts of our debt and finance lease obligations, (ii) expected principal-related derivative cash payments or receipts and (iii) swapped principal amounts of our debt and finance lease obligations:

_______________

Property and Equipment Additions and Capital Expenditures

The table below highlights the categories of property and equipment additions for the indicated periods and reconciles those additions to the capital expenditures that are presented in the condensed consolidated statements of cash flows in our 10-Q.

_______________

ARPU per Fixed Customer Relationship

The following table provides ARPU per fixed customer relationship and percentage change from period to period on both a reported and rebased basis for the indicated periods:

Mobile ARPU

The following tables provide ARPU per mobile subscriber and percentage change from period to period on both a reported and rebased basis for the indicated periods:

Footnotes for Operating Data and Subscriber Variance Tables

Additional General Notes to Tables:

Most of our broadband communications subsidiaries provide broadband internet, telephony, data, video or other B2B services. Certain of our B2B revenue is derived from SOHO subscribers that pay a premium price to receive enhanced service levels along with internet, video or telephony services that are the same or similar to the mass marketed products offered to our residential subscribers. All mass marketed products provided to SOHOs, whether or not accompanied by enhanced service levels and/or premium prices, are included in the respective RGU and customer counts of our broadband communications operations, with only those services provided at premium prices considered to be "SOHO RGUs" or "SOHO customers". To the extent our existing customers upgrade from a residential product offering to a SOHO product offering, the number of SOHO RGUs or SOHO customers will increase, but there is no impact to our total RGU or customer counts. With the exception of our B2B SOHO subscribers and mobile subscribers at medium and large enterprises, we generally do not count customers of B2B services as customers or RGUs for external reporting purposes.

In Belgium, Telenet leases a portion of its network under a long-term finance lease arrangement. These tables include operating statistics for Telenet's owned and leased networks.

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 add 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 on a prospective basis. 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.

Footnotes

_______________

Glossary

10-Q or 10-K: As used herein, the terms 10-Q and 10-K refer to our most recent quarterly or annual report as filed with the Securities and Exchange Commission on Form 10-Q or Form 10-K, as applicable.

Adjusted EBITDA, Adjusted EBITDA less P&E Additions and Property and Equipment Additions (P&E Additions):

• Adjusted EBITDA: 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 net earnings (loss) before net income tax benefit (expense), other non-operating income or expenses, net share of results of affiliates, net gains (losses) on debt extinguishment, net realized and unrealized gains (losses) due to changes in fair values of certain investments, net foreign currency transaction 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. We believe our consolidated Adjusted EBITDA measure, which is a non-GAAP measure, is useful to investors because it is one of the bases for comparing our performance with the performance of other companies in the same or similar industries, although our measure may not be directly comparable to similar measures used by other public companies. Consolidated Adjusted EBITDA should be viewed as a measure of operating performance that is a supplement to, and not a substitute for, U.S. GAAP measures of income included in our condensed consolidated statements of operations.

• Adjusted EBITDA less P&E Additions: We define Adjusted EBITDA less P&E Additions, which is a non-GAAP measure, as Adjusted EBITDA less P&E Additions on an accrual basis. Adjusted EBITDA less P&E Additions is a meaningful measure because it provides (i) a transparent view of Adjusted EBITDA that remains after our capital spend, which we believe is important to take into account when evaluating our overall performance and (ii) a comparable view of our performance relative to other telecommunications companies. Our Adjusted EBITDA less P&E Additions measure may differ from how other companies define and apply their definition of similar measures. Adjusted EBITDA less P&E Additions should be viewed as a measure of operating performance that is a supplement to, and not a substitute for, U.S. GAAP measures of income included in our condensed consolidated statements of operations.

• P&E Additions: Includes capital expenditures on an accrual basis, amounts financed under vendor financing or finance lease arrangements and other non-cash additions. A reconciliation of net earnings (loss) to Adjusted EBITDA less P&E Additions is presented in the following table:

Adjusted EBITDA after leases (Adjusted EBITDAaL): We define Adjusted EBITDAaL as Adjusted EBITDA as further adjusted to include finance lease related depreciation and interest expense. Our internal decision makers believe Adjusted EBITDAaL is a meaningful measure because it represents a transparent view of our recurring operating performance that includes recurring lease expenses necessary to operate our business. We believe Adjusted EBITDAaL, which is a non-GAAP measure, is useful to investors because it is one of the bases for comparing our performance with the performance of other companies in the same or similar industries, although our measure may not be directly comparable to similar measures used by other public companies. Adjusted EBITDAaL should be viewed as a measure of operating performance that is a supplement to, and not a substitute for, U.S. GAAP measures of income included in our condensed consolidated statements of operations.

Adjusted Free Cash Flow (Adjusted FCF) & Distributable Cash Flow:

• Adjusted FCF: We define Adjusted FCF as net cash provided by operating activities, plus operating-related vendor financed expenses (which represents an increase in the period to our actual cash available as a result of extending vendor payment terms beyond normal payment terms, which are typically 90 days or less, through non-cash financing activities), less (i) cash payments in the period for capital expenditures, (ii) principal payments on operating- and capital-related amounts financed by vendors and intermediaries (which represents a decrease in the period to our actual cash available as a result of paying amounts to vendors and intermediaries where we previously had extended vendor payments beyond the normal payment terms), and (iii) principal payments on finance leases (which represents a decrease in the period to our actual cash available), each as reported in our condensed consolidated statements of cash flows. Net cash provided by operating activities includes cash paid for third-party costs directly associated with successful and unsuccessful acquisition and dispositions of $1.7 million and $7.7 million during the three months ended September 30, 2024 and 2023, respectively, and $7.6 million and $23.8 million during the nine months ended September 30, 2024 and 2023, respectively.

• Distributable Cash Flow: We define Distributable Cash Flow as Adjusted FCF plus any dividends received from our equity affiliates that are funded by activities outside of their normal course of operations, including, for example, those funded by recapitalizations (referred to as "Other Affiliate Dividends"). We believe our presentation of Adjusted FCF and Distributable Cash Flow, each of which is a non-GAAP measure, provides useful information to our investors because these measures can be used to gauge our ability to (i) service debt and (ii) fund new investment opportunities after consideration of all actual cash payments related to our working capital activities and expenses that are capital in nature, whether paid inside normal vendor payment terms or paid later outside normal vendor payment terms (in which case we typically pay in less than 365 days). Adjusted FCF and Distributable Cash Flow should not be understood to represent our ability to fund discretionary amounts, as we have various mandatory and contractual obligations, including debt repayments, that are not deducted to arrive at these amounts. Investors should view Adjusted FCF and Distributable Cash Flow as supplements to, and not substitutes for, U.S. GAAP measures of liquidity included in our condensed consolidated statements of cash flows. Further, our Adjusted FCF and Distributable Cash Flow may differ from how other companies define and apply their definition of Adjusted FCF or other similar measures. The following table provides a reconciliation of our net cash provided by operating activities to Adjusted FCF and Distributable Cash Flow for the indicated periods.