Liberty Global Ltd.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global's fourth quarter 2020 investor call. This call and associated webcasts are the property of Liberty Global and any redistribution, retransmission, or rebroadcast of this call or webcast in any form without the express written consent of Liberty Global is strictly prohibited. At this time, all participants are in listen-only mode. Today's formal presentation materials can be found under the Investor Relations section of Liberty Global's website at libertyglobal.com. After today's formal presentation, instructions will be given for a question-and-answer session. Page 2 of the slide details the company's safe harbor statement regarding forward-looking statements. Today's presentation may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including the company's expectations with respect to its outlook and future growth prospects and other information and statements that are not historical facts. These forward-looking statements involve certain risks that could cause actual results to differ materially from those expressed or implied by these statements. These risks include those detailed in Liberty Global's filings with the Securities and Exchange Commission, including its most recent filed forms, 10Q and 10K, as amended. Liberty Global disclaims any obligation to update any of these forward-looking statements to reflect any change in its expectations or in the conditions on which any such statement is based. I would now like to turn the call over to Mr. Mike Freese.

Thanks, operator, and welcome, everyone. Appreciate you joining us today. As this is our year-end call, we've got a lot of ground to cover. I'm going to apologize up front for the length of the remarks. But all my key execs are on the line, and I'll be sure to get them involved during the Q&A. And then as usual, Charlie and I will be speaking from slides, which are available on the website, so hopefully you can access those and follow along. I'm going to begin on slide four with some 2020 highlights, and by any measure, This was an extraordinary year for us, for our employees and our customers. Nobody was immune to the effects of COVID-19 in 2020, including us, as you'll see, but we were lucky. Lucky to have some strong antibodies, so to speak, that emanated from the critical role we play in the lives of our customers, which allowed us to meet or exceed nearly all of our own internal forecasts that we established pre-COVID. Families, schools, hospitals, businesses, big and small, saw the reliance on stable and robust connectivity rise to unprecedented levels. Average upstream and downstream traffic in January was still 90% and 60% above year-ago levels. So we're still in this and doing quite well. As with any crisis, so many operating lessons were learned. For example, the importance of putting our people first with flexible work arrangements, constant communication, and attention to their well-being. We also experienced a goodwill that comes from going the extra mile for our customers and our communities with more speed, more data, more entertainment, and essential and low-cost access plans. And we quickly identified the significant benefits of accelerating the digital roadmaps we were already on for customer sales, care, and retention. It's also fair to say that throughout the year, there was an underlying flight to quality among connectivity customers, which really played to our strengths. We already deliver the fastest speeds, the most reliable services, fixed mobile bundles, and better customer experiences in our competition. And as the customer puts a higher value on these factors moving forward, we're committed to the investments and the innovation required to solidify that position. And you've seen that happening in our fixed mobile transformation, our launch of one gig broadband everywhere, our investments in digital customer journeys, and our commitment to new connectivity and entertainment projects, which I'll talk about here. So with all that said, perhaps not surprisingly, 2020 was a strong year for us operationally and financially. There's a summary table on the right side of this slide with the key numbers, but I'll just highlight a few things, beginning with our significant increase in subscriber growth. We added over 80,000 new fixed customers in the year, reversing the trend of customer losses, which stood at 74,000 last year. And broadband net additions, perhaps one of our most important measures of growth, were 242,000, up threefold from 2019. We even saw growth in post-paid mobile ads to 513,000, despite shop closures throughout the year. Now, there were plenty of key drivers behind these results. For example, all operations saw reduced churn and higher MPS, and that provided a tailwind. This was particularly evident in the UK, where we delivered consistent growth on our BAU footprint and, of course, in new-built territories. We also saw consistent sales and net-add improvement in Switzerland every quarter, continuing the turnaround that began 10 quarters ago. Now, Charlie will take us through the financial results, but the bottom line is we delivered. If you net out the impact of COVID on things like premium sports and mobile roaming, we generated positive revenue, while at the same time exceeding our original expectations for EBITDA and operating free cash flow. The standout number for me, and I'm sure for you, was free cash flow, where we beat guidance with $1.1 billion this year, up nearly 40% year over year. Now, you can do the math against our 580 million shares outstanding to arrive at free cash flow per share, since apparently we're discouraged from doing that for you, and you'll see that the implied yield on our stock is attractive. Now, moving to the second box, there's more good news here when you look at our Q4 results. We've been talking about low-churning record MPS most of the year, and this continued to drive sales and net ads higher in Q4. making it by far our best-performing quarter of the year. Virgin Media in particular saw its best customer growth in 12 quarters, and our Swiss operation UBC delivered positive broadband additions for the first time in 13 quarters, and that complements another strong quarter from Sunrise. At the foundation of this customer growth, our key product launches around 1G, smart Wi-Fi, and our advanced entertainment platform. Again, I'll talk about those in a second. Now, despite working from home and all of the related challenges of a pandemic, We made some pretty big strides in our fixed mobile transformation here with two large M&A transactions, and you're aware of these. As I just referenced, the acquisition of Sunrise closed in November, and I could not be happier with the progress we've already made on leadership, integration, and commercial planning. We've got a rock star management team led by Andre Krause, who was the CEO of Sunrise, and including Severina Pascu, who launched the UPC turnaround and will now report to Andre in a COO role. The Swiss synergies have been validated, commercial day one planning is well advanced, and momentum in the meantime continues to accelerate. So we should have much more to say about that on our second quarter call, sorry, on our Q1 call. Now turning to the UK, as we do quite a few times today, I'm happy to report that the regulatory review of the joint venture we announced last May between Virgin Media and Telefonica's O2 is right on track. Now we've been heavily engaged with the CMA and feel really positive about a mid-year approval. Like Switzerland, everything we've learned in the meantime just reaffirms our confidence in this combination, financially and operationally. As reported, the Swiss and UK deals together represent about $12 billion of synergies on an NPV basis, and that's at today's FX rate, around 65% of which should accrue to us. Now, you can do the math on that in terms of potential value creation. And I'll also just point out, as with our Belgian and Dutch integrations, we have a pretty good track record of under-promising and over-delivering on synergies. As you probably noticed, Vodafone Ziggo reported around 6% EBITDA growth and $1.2 billion of operating free cash flow for 2020, with all expected synergies achieved a year earlier than planned. And as I mentioned on the last reading call, Vodafone Ziggo is a great case study for how fixed mobile convergence delivers growth and stable free cash flow even before the more strategic opportunities are factored in, which is a great segue to our 2021 priorities. And I'll start with our commitment to two initiatives that are very, very important to all of us. First of all, I'm extremely proud of our work in diversity, equity, and inclusion across Liberty Global. We've been focused for some time on gender equality and supporting the less fortunate in our communities with broadband access, but we can and we will do more. So we established our first global DE&I Council last year, which I co-chair. We've ramped up both our internal and external work around five pillars, ethnicity, gender, LGBTQ, ability, and generational equity. This builds on our programs already in existence and turbocharges others. But the bottom line here is that we will hold ourselves and the entire company accountable to greater awareness and tangible goals that reflect our culture and our purpose. I'm equally committed to our ESG programs where we're already a recognized leader. Most of you know that we've been in the Dow Jones Sustainability Index for years and are currently number three in the telecom media sector. We're also in the top 15% of S&Ps, sustainability performance measures, among other acknowledgments. And like many of our peers, we're squarely focused on our net zero targets, which we will announce later this year. Now, let me quickly hit on five other key priorities for 2021. First of all, as you'll see later in the presentation, each of our core markets is planning to deliver positive revenue growth this year, reflecting continued momentum in customer additions, expected or announced price rises, and progress in our B2B divisions. Just a footnote, that assumes modest, not necessarily heroic improvement in the COVID crisis throughout the year. Second, I'm nearly certain that despite $45 billion of accreted M&A last year, 2021 will be equally busy and exciting for us on the strategic front. Becoming a fixed mobile champion and number one or two in our markets delivers more than competitive stability and long-term growth. It also gives us the scale to shape our markets and drive even greater value creation, which we will do. Third, we'll continue to optimize our portfolio of venture investments in 2021 to bring greater transparency to the assets that we believe already represent about $4 per share, and I'll come back to that in a moment. And then fourth, we're laser focused on free cash flow growth. Charlie will take us through the guidance in greater detail in a few slides, but I'll steal the headline, which is that we're forecasting a 25% increase in free cash flow over the year. And when you factor in our commitment to buybacks with a billion dollars we purchased last year at about $19 a share and a new $1 billion buyback authorization in place for this year, we should see an even bigger increase in free cash flow per share. Now, let's dig a bit deeper on our operational performance on slide five. And the purpose here is to lay out visually the acceleration in customer growth we saw throughout the year, side by side with the core product innovations that stimulated and supported that growth. So starting on the left-hand side of the slide, you can clearly see the significant sequential improvement each quarter in customer and broadband additions, by far our most important measures of growth. Fixed customer ads went from negative 19,000 in Q1 to 56,000 in Q4, almost in a straight line. And we set new highs in broadband with 242,000 total ads that I just set up threefold from last year. And again, steady sequential improvement quarter after quarter. Now, the biggest contributor to this growth was our biggest market. Virgin Media added over 100,000 new broadband subs last year, drawing from, again, both the BAU and Lightning footprint. And in the fourth quarter, grabbed nearly 45% of all broadband net ads in the market, even though we only reach half the country. So many things are coming together right now in the UK. Lutz and his team have done a fantastic job. We've seen better base management and record low churn. They brought call centers onshore but still increased the percentage of digital sales to 50%. The network is resilient, and they've rolled out a bunch of new products like 1GIG, fixed mobile bundles, 5G, TV 360, and intelligent Wi-Fi. And those same growth drivers are being activated across our European footprint. So in the middle of the slide, you can see that we doubled the number of homes commercially available for one gig broadband to 20 million at the end of the year with most markets at a hundred percent coverage today. So back to the UK, our gig one commercial rollout reached 7.3 million homes by December, almost twice the number of BT open reach. And of course we're only half the market and we'll be firing up the remaining 8 million gig one homes throughout the balance of 2021. That will significantly widen the gap with BT and provide a great tailwind for Virgin media. To be clear, it's early days in the marketing of one gig services for sure. And you can see that in the middle of the slide, but just under 200,000 gigabit subs in our footprint today. But we know speed matters to customers. We know it matters now more than ever. Today, over 90% of our broadband subs are on 100 megabit or higher service, and half of our subs are at the 200 meg or higher level. And we've seen this movie before. It's just a matter of time before one gig product gains traction, and then we leave the market again. Now, turning the video quickly on the bottom left of the slide, You can see the improvement in video losses from 74,000 in Q1 to just 10,000 in Q4. Total losses of 180,000 in a year were 30% fewer than last year and represented around 2.5% of our video base. That's meaningfully better than the U.S. Now, we've talked a lot about the differences between Europe and the U.S. many times. We have lower video ARPU, so less pressure on subs. We have a stronger free-to-air broadcast sector, which keeps more eyeballs on linear and time-shifted televisions. And we have widely available fixed mobile bundles where we know the video products is a key component for customers. On top of that, we continue to roll out the most advanced video devices in the market, like TNA360, which I've mentioned in the UK, which has our latest UI and now shows an MPS improvement of 50 points, and our new IP box that we call Apollo, which is a 4K app-centric box, very inexpensive device. It actually fits in your palm and allows us to upsell the traditional video products. The entertainment roadmap, in my opinion, has never been more robust. with all countries on the same platform for the first time. I'll just close this slide out by saying the momentum you see building on this chart has largely continued into 2021. With modest price increases, continued churn management, and product innovation, this should be a strong year for our B2C business. Now, of course, that assumes the availability of vaccines will reduce the need for further lockdowns, as I already mentioned. In other words, we do expect a slow but steady improvement in economic activity throughout the rest of the year. By the way, just a footnote. We've given you an update on each country in the appendix, including data on Project Lightning, which I know you're always interested in. And I'll just say Project Lightning continues to perform brilliantly. So look for that information. I'm going to end my remarks with a few words on our Ventures portfolio. Last quarter, we provided a teaser for you with highlights on a handful of investments, but really not much granularity. And given that we believe the total portfolio is worth $2.4 billion today, or a little over $4 per share, We thought it might be useful to provide a bit more detail on these investments. So on side six, you'll see the four verticals that comprise a portfolio. Tech, content and sports, sort of emerging markets and a catch-all really, and infrastructure. And as you'll quickly spot, 90% of the value resides in the first two buckets on the left. So that's where I'll spend my time, starting with our tech ventures portfolio. As some will know, we began investing in tech about 12 years ago. with a small dedicated team in Denver and Silicon Valley, which remains very small today. And during that time, the goal hasn't wavered really. We're looking at mostly modest investments in early to mid-stage companies that provide products or services we can exploit in our operations. Historically, the team has been focused on verticals like infrastructure and cloud and machine learning with some blue sky investments and things like gaming or augmented reality or advanced advertising. Now, while the value we deliver to the portfolio company can be significant because we're typically a customer, That's why we get asked to be in a lot of deals. We don't include the value that the portfolio company brings to us in our returns. And trust me, there have been many examples where that number is large. Today, we have around $250 million currently invested in 40-plus companies, which we value at nearly four times that amount. This excludes the $180 million that was previously invested in the Ventures Fund and has already returned $350 million of capital to us, which we've just moved into our consolidated cash balances. The team, you know, they've historically invested around $50 million per year, but they have made some really smart bets, and we've shown a couple here on the slide. Skills, for example, is a mobile gaming platform that we invested $14 million in back in 2017, anticipating our role in the mobile business, and today is publicly listed with a market cap of just under $14 million, valuing our stake at $450 million. Plume is principally a supplier of smart Wi-Fi devices in the home. that improve or extend reach, but also serve as gateways for device management. We've rolled it out in Europe. Comcast is the largest distributor in the U.S. We began working with Plume in 2014 as a potential supplier and ultimately invested $25 million. And based on our latest funding round, that stake's worth around $170 million. And we have an incredibly strong relationship with this strategic vendor. There are a host of other examples in the tech portfolio. In fact, the team believes we're currently invested in no fewer than nine companies that either are or we think will be unicorns. Now, like any good venture investor, we have and we will continue to monetize these positions when the opportunity arises and then return that cash to corporate. The second large bubble represents our investments in content and sports, valued at $1.25 billion today. And this includes our stakes in companies like ITV, All3Media, Lionsgate, and Formula E. Now, as most of you know, we acquired 10% of ITV around seven years ago at an average cost of £2.16 pence. Not surprisingly, and as most have figured out, we fully hedged that position at the time with a collar. And as those collars will expire soon, we have begun unwinding that position and lowering our cost basis in the shares. Currently, we're long about 7% of ITV at 75 pence, and the stock closed Monday at 113, and the balance remains collared, and we may or may not close that out. We'll see. We did the same thing with our hedge position in Lionsgate when the stock was in the mid-single digits or thereabouts and now trades at 13. So let me preempt the question by saying right up front that these steps do not portend anything strategic with these companies. We're just taking advantage of market dislocation to materially average down our cost in these positions like any smart investor would do. And just a quick word on Formula E, which is starting its seventh season of eight races later this month in Saudi Arabia. I don't think I have to explain why this racing series is well-positioned, right? With manufacturers like Mercedes and Porsche now in the series, everyone appreciates the future of driving and racing as electric. And we have about $150 million invested at a 33% stake that we conservatively value at $250 million. And yes... Many SPACs have been circling. We'll see what happens. But the only other thing I'll mention briefly is our growing investment in infrastructure, which we believe holds immense untapped potential for us. And I'm referring to both our own infrastructure, like cabinets, real estate, and towers, which we're rapidly organizing into separate units where necessary, and third-party investments in businesses like EdgeConnex, for example, where we rolled our stake into EQT's $2.7 billion acquisition of EdgeConnex for a 2x return in the seat of the table for with what is arguably the smartest investor in infrastructure in Europe. So there's lots of exciting things happening on the ventures front. Historically, we've been pretty quiet about our activities, and certainly they're not taking resources or focus away from our primary business. But there is real value here and real strategic connection to our operations, and you can expect us to be more transparent moving forward. So let me recap. A strong 2020 operationally and financially and a great start to the year. You'll see that. Our two big fixed mobile combinations in Switzerland and the UK are right on track. And with $6 billion of liquidity at your end, we continue to invest our capital exactly how we signaled we would. So first, building FMC champions in our core markets. We've done that. A second, opportunistically investing in ventures that are both strategic and financially rewarding. And you are seeing the fruits of some of that work right now. And third, buying back our shares, which obviously we believe are undervalued relative to almost any measure. So I'm excited to take your questions. But first, over to you, Charlie.

Thanks, Mike. Turning to our consolidated numbers, I'm starting on a page entitled Underlying Revenue Stable. Total group revenue saw a decline of 0.5% in Q4, resulting in a full-year decline of 1.5%. We estimate the negative impact of COVID to be around $54 million in Q4 and around $200 million for the full year, which negatively impacted our growth rate by around 1.8%. Without that, we believe the group would have seen positive rule-based revenue growth for the full year. On the right-hand side of the page, for each of the last three quarters, you can see the five key areas impacted by COVID. In general, COVID impacted our business much less in Q4 than it did when the pandemic first hit in Q2. The impact of not having access to premium sports in Q2 was $34 million, but as the sports started to return by Q4, the downside was only around $7 million. Ansett sales and revenue revenues were impacted by the pandemic, and we estimate contributed to a $16 million drag in Q4, while the impact on our broadcasting businesses was around $6 million for the quarter. There was some impact on our B2B businesses. We estimate around $22 million in Q4, but it was largely due to reduced sales. Fortunately, to date, we haven't seen a material impact on bad debt and late charges on either our B2B or consumer businesses. On the next slide, we provide details of our adjusted WBA, For the full year 2020, we delivered minus 3.9% adjusted EBITDA growth, which was in line with our expectations. As we called out in our Q3 results presentation, Virgin Media declined 11% rebates versus Q4 2019. Now, this was driven by $7 million of costs related to the O2 merger and some other growth investments, particularly $21 million in the accelerated digitization and onshoring of our customer contact platforms, as well as an $18 million increase in marketing, which did result in accelerated subscriber growth. The remaining difference versus Q4 of 2019 was the impact of end-of-contract implications, network taxes, and the deferral of our price rise from Q4 to Q1 2021. Swiss trends continued to gradually improve with a 7.9% decline in Q4, partially explained by a 4% drag from $10 million of costs to capture our estimated synergies. While Sunrise's rebase results in the period since completion had zero impact on our year-on-year financials, As a standalone business, we've reported around 2% full-year growth based on a historical IFRS reporting policy. Turning to operating free cash flow, we delivered 5% operating free cash flow growth for the full year, which is in line with our guidance of mid- to single-digit growth. This is despite $26 million of cost to capture, which is equivalent to more than 1% of growth. Our capital intensity declines 22.5% in 2020, or 19.6%, exceeding capex related to project landing. And, but for cost of capture in Switzerland, all markets would have returned positive OFCF growth year-on-year. The standout result was our deconsolidated joint venture in the Netherlands, which grew 9% year-on-year, delivering $1.2 billion of operating free cash flow. Turning to our 2020 free cash flow results, we delivered 39% growth, or $300 million compared to 2019, and reported $1.1 billion of consolidated free cash flow ahead of our $1 billion guidance. This is despite some currency headwinds versus the guidance assumptions and a $16 million drag from working capital, which we generally believe should be brought back for telecoms companies such as ourselves. Our cash flow was further suppressed by $329 million of capital expenditures related to our UK network expansion project line. On the page entitled 2021 Outlook, we provide details of our expectations for our key assets going forward. Given that we fully expect our UK business will be deconsolidated into a joint venture by mid-year, and that Vodafone, Zyga, and Telnet already provide standalone guidance, going forward we'll provide our key financial guidance not on a group, consolidated basis, but for each business unit. At the group level, we'll be guarding only to consolidated free cash flow, which we expect to grow more than 25% to $1.35 billion for 2021, based on the assumption that the JV closes at mid-year. In the UK and Ireland, we expect a return to top-line growth despite an increased urine impact from end-of-contract and best tariff notifications, although cost-to-capture synergies will weigh in on adjusted EBDA and OFCF growth. For the full year, we would expect standalone Belgian milk to decline no single digits across both metrics. We also expect a return to revenue growth in Switzerland for the combined UPC Sunrise They expect a low single-digit adjusted EBITDA decline and a mid-single-digit OFCF decline. That's because we're spending over 150 million Swiss francs of costs to capture synergies, but on the underlying business, we think there'll be growth. Telenet, our Belgian operation, has guided to 1% to 2% adjusted EBITDA growth and continued free cash flow growth, expecting to generate 420 to 440 million euros. Urban Ziggo, our Dutch JV, has guided to 1% to 3% adjusted EBITDA growth An increase year-on-year of cash distributions to shareholders is guided to a range of 550 to 650 million euros or 677 to 800 million dollars. And with that operator, over to questions.