Rating Action: Moody's affirms Liberty Global's Ba3 CFR; stable outlookGlobal Credit Research - 17 Mar 2021London, 17 March 2021 -- Moody's Investors Service ("Moody's") has today affirmed Liberty Global plc's (Liberty Global or the company) Ba3 corporate family rating (CFR) and Ba3-PD probability of default rating (PDR). The outlook on the ratings remains stable.The rating action follows the completion by Liberty Global in November 2020 of the acquisition of Sunrise Communications Group AG (Sunrise) for USD7.4 billion through the settlement of the all cash public tender offer to acquire all of the outstanding shares of Sunrise. As of December 31, 2020, Liberty Global held 98.9% of the share capital of Sunrise and has initiated a statutory squeeze-out procedure pursuant to which the company will acquire the remaining Sunrise shares that it does not yet own. This squeeze-out procedure is expected to be completed during the first half of 2021. Additionally, in May 2020, Liberty Global and Telefonica S.A. (Baa3 stable) announced that they entered into an agreement to form a 50:50 joint venture (VMED O2 UK Limited, Ba3 stable) combining the UK's operations of Virgin Media Inc. (Ba3 stable) with O2 Holdings Limited. Virgin Media Inc.'s operations in Ireland will thus not be a part of the joint venture. UPC Holding B.V. (B1 stable), 100% owned by Liberty Global, will significantly increase its scale following the integration of Sunrise while Virgin Media UK's operations will be deconsolidated from Liberty Global following the closing of the VMED O2 UK joint venture. The joint-venture is subject to regulatory approvals in the UK with closing expected by the middle of 2021.RATINGS RATIONALELiberty Global's Ba3 CFR reflects (1) the company's strong position in the markets where it operates supported by resilient market shares despite intense competition, (2) the improved business profile of the company's Swiss and UK's operations following the acquisition of Sunrise and the expected setting up of the joint-venture with O2 UK, respectively, which will provide these entities a larger scale and ability to deliver fixed-mobile convergence through their fixed and mobile infrastructures, (3) the good quality of the cable networks operated by its subsidiaries which are in the process of being upgraded to DOCSIS 3.1 technology to offer broadband speeds of up to 1 gigabit per second (Gbps), and (4) its good liquidity supported by a large cash and cash equivalents balance at the holding company level with availability under the different revolving credit facilities at its subsidiaries and the large amount of cash to be up-streamed from VodafoneZiggo Group N.V. (B1 stable), the 50:50 joint-venture between Liberty Global and Vodafone Group Plc (Baa2 negative) in the Netherlands and from VMED O2 UK.However the rating is constrained by (1) the reduced scale of the consolidated group pro forma for the setting up of the VMED O2 joint-venture which will lead to the deconsolidation of Virgin Media UK's operations from the company leading to a higher revenue concentration around two geographies, namely UPC mainly in Switzerland and Telenet Group Holding NV (Ba3 stable) in Belgium, (2) the high adjusted leverage of the company which Moody's forecasts at 5.9x at the end of 2021 (pro forma for the deconsolidation of Virgin Media UK and the recapitalization of Virgin Media's Irish operations) with limited organic de-leveraging going forward although this has been so far mitigated by the company's large cash and cash equivalents balance at Liberty Global which mainly results from a significant disposal in 2019, and (3) the significant competitive pressure in the markets where the company operates including in Switzerland where UPC Switzerland has experienced a prolonged decline in revenue and EBITDA.Pro forma for the deconsolidation of the Virgin Media UK's operations and the full year contribution of Sunrise, Moody's forecasts Liberty Global's revenue in 2021 to decrease to approximately USD8.0 billion from USD12.0 billion reported in 2020 with Belgian and Swiss operations accounting for approximately 40% each of pro forma group adjusted EBITDA (as reported by the company) in 2021. The reduced scale of the business is partly mitigated by the large and recurring dividend payments to be received from VodafoneZiggo and VMED O2 UK.While Liberty Global's adjusted gross leverage is elevated and projected by Moody's at 5.9x at the end of 2021 (pro forma for the deconsolidation of Virgin Media UK's operations, the recapitalization of Virgin Media Ireland following the closing of the VMED O2 UK joint-venture and the full year contribution of Sunrise), it does not take into consideration the company's large cash and cash equivalents balance. As of 31 December 2020, Liberty Global's cash and cash equivalents, including separately managed accounts classified under current investments, amounted to USD2.9 billion. Moody's notes however that the cash balance may increase further by the end of 2021 to approximately USD5.0 billion. Liberty Global is expected to receive an estimated USD1.9 billion in total, including approximately USD1.1 billion from the recapitalization of Virgin Media's retained and 100.0% owned Ireland business. Taking into consideration the projected increase in cash and cash equivalents by the end of 2021, Moody's projects net leverage to be significantly lower at 4.2x compared to 5.9x on a gross basis. Nevertheless, the use of this large cash and cash equivalents balance remains uncertain and represents an event risk. Moody's considers the cash balance could be used to partly fund M&A transactions or towards shareholder remuneration. The rating agency however considers unlikely that the cash will be used to directly de-leverage its consolidated subsidiaries which currently operate within their respective net leverage target ranges.Moody's thus regards Liberty Global's liquidity as good. In addition to the cash and cash equivalents balance which is likely to increase to close to USD5.0 billion by the end of 2021, there is available borrowing capacity under the various credit facilities within Liberty Global which totaled approximately USD2.9 billion for the company's continuing operations as of year-end 2020. Pro forma for the deconsolidation of Virgin Media UK, available credit facilities will decrease to EUR736 million at UPC Sunrise and EUR555 million at Telenet or EUR1,291 million in aggregate. Liberty Global and its subsidiaries have limited near-term maturities compared with the size of the group. As of 31 December 2020, Liberty Global's average tenor of third-party debt was around seven years.RATING OUTLOOKThe stable outlook is based, among other things, on Moody's expectation that Liberty Global's consolidated subsidiaries, namely Telenet and UPC, will experience a stable operating performance while the company will continue receiving large remunerations from VodadoneZiggo and VMED O2 UK following the closing of the joint-venture. The outlook also reflects Moody's expectation that the company will take a conservative approach in terms of the use of its large cash balance supporting de-leveraging of the consolidated group.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSUpward rating pressure could develop if Liberty Global's (1) operating performance improves significantly, (2) Moody's-adjusted gross debt/EBITDA falls below 4.0x on a sustained basis (excluding any unusual currency translation effect on reported results), and (3) adopts a more conservative shareholder remuneration policy. Downward rating pressure could develop if (1) Liberty Global uses a significant portion of its large cash balance for shareholder remuneration or M&A transactions which do not support de-leveraging of the consolidated group leaving Moody's adjusted gross leverage above 5.0x on a sustained basis; (2) the company experiences a marked deterioration in its operating performance; or (3) its free cash flow (after capital spending and dividends) deteriorates on a sustained basis while the company maintains its historical level of shareholder remuneration.PRINCIPAL METHODOLOGYThe principal methodology used in these ratings was Telecommunications Service Providers published in January 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1055812. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.COMPANY PROFILELiberty Global plc is a large international cable communications company, with operations in six European countries (namely the UK, Ireland, Belgium, Switzerland, Poland, and Slovakia excluding the Netherlands where the company operates through a joint-venture). Liberty Global operates the largest cable network in each of its countries of operation, except in Poland, where it operates the second largest cable network.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Sebastien Cieniewski VP - Senior Credit Officer Corporate Finance Group Moody's Investors Service Ltd. One Canada Square Canary Wharf London E14 5FA United Kingdom JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 Peter Firth Associate Managing Director Corporate Finance Group JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 Releasing Office: Moody's Investors Service Ltd. One Canada Square Canary Wharf London E14 5FA United Kingdom JOURNALISTS: 44 20 7772 5456 Client Service: 44 20 7772 5454 © 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $5,000,000. MCO and Moody’s Investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY550,000,000.MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements. ​