Liberty Global Ltd.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global's first quarter 2021 investor call. This call and the associated webcast 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 a 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 slides 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 fact. 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 recently filed Forms 10-Q and 10-K, 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. Fries. Great. Thanks, operator, and hello, everyone.

I hope you're doing well, and we, as always, appreciate you joining our Q1 results call today. Charlie and I are going to run through what we hope are some abbreviated remarks, leaving a bit more time for your questions. And I've got pretty much the entire team on the call, and I'll get them involved as needed. I'm going to kick it off on slide four, if you're following along with some key headlines for the first quarter. But before I do that, let me just say that we continue to remain focused on our employees and customers, first and foremost. during what remains a pretty challenging period in Europe as it relates to COVID-19. Although we've seen infections in all of our markets coming down from peak levels, vaccination programs on the continent had a slow start, as you probably noticed. As a result, travel restrictions and protocols are still pretty tight in Europe. Now, despite these pandemic-related challenges, we're very encouraged by the operational progress we made during the first quarter of 21. The commercial momentum we experienced throughout most of last year has carried right into the new year. In Q1, we added nearly 40,000 new customers compared to a loss of 20,000 last year, and over 225,000 broadband and mobile RGUs. That's up over 60% from the same period in 2020. On a consolidated basis, we grew revenue. We grew operating free cash flow, and that's despite COVID impacts and some merger or synergy-related costs that Charlie will walk us through. As a result, we're confirming our free cash flow guidance today, which despite continued investments in future growth, We expect to be up over 25% this year to $1.35 billion. And that's regardless of when the Virgin Media O2 transaction closes. Obviously, completing that JV will be a major milestone for us. I mean, technically, the transaction is still under review by the CMA. But as you would have seen, they provisionally cleared the deal last month without remedies. So we're still expecting a June closing. Once that happens, we will have created fixed mobile champions in all of our core operating markets. And whether we bought the mobile asset like we did in Belgium or Switzerland, or whether we joined forces with the number one mobile operator like we did in Holland or we're doing in the UK, the benefits of fixed mobile convergence are powerful. And they're supported by what I've started to call the four S's, for lack of a better term. And that means scale, synergies, strength, particularly competitive strength, and strategic optionality. Let me walk through these quickly. From a scale perspective, These deals make us the number one or number two telecom operator in every market in just about every product. So beyond the benefits of convergence and nationwide customer reach, we gain the ability to shape the ecosystem from a regulatory, competitive, and structural point of view. I just can't tell you how important that's going to be going forward. As we discuss often, the synergies in these combinations are substantial. They represent a built-in value accelerator for us. Our track record so far is outstanding on achieving fixed mobile synergies. Those who have followed us would know that. And as we sit here today, there's a future synergy MPV of over $12 billion in Switzerland and the UK. Perhaps most importantly, when you combine market-leading talent, product innovation, and convergence, our fixed mobile champions have the strength, the competitive strength, to drive long-term financial and operating growth. And then finally, the combination of scale, synergies, and strength opens up a whole range of strategic options in areas like content or ventures or new financing mechanisms or infrastructure. Now, I don't have to tell anyone on this call what's happening in the infrastructure or network space. You're all watching it. But I have said many times that we're in a great position to take advantage of that, whether that's by monetizing tower assets, tapping into new capital sources to leverage our own networks, We're generating new revenue stream, and I'll get into that a bit more on the next slide. The last headline here relates to our current $1 billion buyback program, which has been progressing at a pretty rapid pace, you may have noticed. We spent around $450 million in the first four months of the year, really just to take advantage of the value gap in our stock, especially with the growth we're delivering and the pending transaction in the UK. And I expect a lot more to say about that on the second quarter earnings call. Now, slide five just runs through the logic and rationale of the Virgin Media O2 combination through the lens I just walked through, scale, synergies, strength, and strategic optionality. So first, we're creating the clear number two operator in the market after BT, with 42 million fixed and mobile subs, 11 billion pounds of revenue, and nearly 4 billion pounds of EBITDA. But we're also combining two best-in-class infrastructures, including the largest and most admired mobile platform with 40% of the market, and the UK's fastest broadband network, serving over half the country with one gig speeds by year end. By the way, our broadband and pay TV market share is also about 40% on the Virgin footprint. Synergies in the deal are the largest I've seen, amounting to an MPB of 6.2 billion pounds or around 540 million pounds on an annual basis. I think it's important to remind everyone that 80% of these synergies are cost-driven and should be achieved in roughly three years, and that assumes a 700 million pound integration cost. I'll also add that these numbers have been vetted multiple times by both Virgin and O2 and clean teams working together, so we really hit the ground running on synergies. By the way, this is a great moment to congratulate our very own Lutz Schuller on his anticipated appointment to the CEO role upon closing. As you all know, Lutz has been with Liberty for over 10 years now, most of that time building our highly successful German business that we sold to Vodafone for 12 times EBITDA, and then since then reinvigorating growth at Virgin Media. What you may not know is he spent the 10 years prior to joining us working for Telefonica in their German mobile business. So he's uniquely qualified in terms of fixed mobile convergence, transformation, value creation, and of course he has a terrific knowledge base on both shareholders. The balance of the leadership team, including incoming CFO Patricia Cobian, who's from O2, have been selected and will be announced as soon as we get final clearance. So Virgin Media O2 will start out with real advantages, including a winning team, strong product offerings, two premium brands, the best connectivity and entertainment bundles in the market, and the opportunity to create the UK's first fully converged and digital platform. The last point I'll address here relates to a question many of you ask us and we often address proactively. I'm referring to the strategic optionality the GAB will have on day one to both expand, upgrade, and monetize its fixed infrastructure. We've already talked publicly about the opportunity to extend Virgin's 1GIG network to an additional 7 million homes, allowing us to tap into new revenue streams like wholesale, of course, retail convergence, and B2B, and perhaps giving us access to new sources of capital on really attractive terms. And we'll quickly explore strategies to maintain our significant speed advantage on our existing 15 million homes using new technologies like DOTSIS 4 and even XGS Pond through our existing DUCs. I think we're all excited about the options here, which are meaningfully more attractive as a combined fixed mobile champion in this market. Now, clearly our confidence in those fixed network strategies is emboldened by Virgin Media's recent performance. As you can see on slide six, Q1 was another strong quarter for Virgin Media with our best revenue performance in over two years. And that was driven by record low broadband churn, strong top line growth in B2B, and new FMC bundles. Customer additions also fueled revenue. Despite the price announcement, which is typically a tough order for us, by the way, we actually added 31,000 new customers and registered our fourth straight quarter of customer growth in our BAU markets. Broadband is a great story here in the U.K., with a four-fold increase year-over-year in net broadband ads. In fact, over the last four quarters, this is a great stat, Virgin Media added over 170,000 new broadband subs in the UK. In the four quarters prior to that, that number was 20,000. Now, there's a lot of significant drivers behind this acceleration, including the launch of intelligent Wi-Fi with Plume, acceleration in FMC bundles, the launch of 5G in January, and sustained investment in gigabit network expansion, digital transformation, and customer service, all of which are instrumental components in establishing a stronger and nimbler business for the future. This all bodes really well for the JV with O2. Now, I'll end with a chart on slide seven that summarizes some of the key operating highlights for Liberty Global on a consolidated basis, and then for the big four opcos, Virgin Media, Sunrise, UPC, Telenet, and Vodafone Ziggo, moving left to right. I think it provides a good perspective on how each business is evolving side by side. And I could probably spend 20 minutes on it, but instead I'm going to spend about two and a half. And I'll start with three general comments about the group. First of all, if you just scan the net ad data at the top of the chart, first three lines, you'll see a lot of green arrows pointing up. And that reflects strong improvement year over year in customer, broadband, and post-paid mobile growth across our opcos. So it's not just Virgin Media that's accelerating. It's happening pretty much across the board. You'll also notice that we've ramped up our one gig networks. with Switzerland and Belgium now reaching 100% of customers with a one gig offering, and the U.K. expected to be at 100% and Holland at 80% by the end of this year. So when we show this chart in early 2022, those numbers will all read at or around 100%. None of our peers can say that. Then finally, a comment on fixed mobile convergence ratios, which continue their steady rise of about 150 to 300 basis points, Belgium and Holland are now at or above 45%. And Switzerland is at 55%. That reflects high convergence at Sunrise, but only 25% at UPC. So large, untapped cross-sell opportunities in Switzerland and in the U.K. Now, I've already talked about Virgin Media, so I'm just going to add a few quick comments on some of the financial data. First, a quick explanation of the ARPU decline of 4%. This was impacted negatively by three things. Number one, only one month of price rise contribution. That was in March. Number two, the headwinds of end of contract and annual best tariff actions, which we talk about every quarter. Number three, a decline in other revenue like phone usage and pay-per-view. And then on EBITDA, which was down 1.9%, I think it's important to point out that the figure includes a nearly 1% drag from merger-related charges associated with the joint venture. So if those costs were excluded, the EBITDA loss would have been close to 1%. Those same costs, by the way, had about a 2% drag on operating from cash flow growth. Turning to Switzerland briefly, the new Sunrise UPC is off to a great start. Andrea and the team delivered a strong Q1 with 56,000 broadband and post-paid mobile ads. That's up 50% year over year. And that was fueled by sales momentum across both brands and record MPS at both Sunrise and UPC. They also rolled out, you may have noticed, a commercial they want to offer to new and existing customers. That's called Together More Wow. That's a program that rewards existing customers with benefits like a free SIM and discounted sports and security packages, essentially similar to what we've done in markets like Holland, and then motivates new and cross-sell customers with giveaways like laptops, iPads, and TVs, and the reaction so far has been very strong. Now, you can expect regular updates on the integration process in Switzerland, which at this stage is going really well. The first positive synergies materialized last month, and you might have noticed that the headcount restructuring was just announced. Financially, Revenue was largely flat in the quarter, with EBITDA down 7.3%, and operating free cash flow down 6.2%. But those numbers include about $11 million and $20 million, respectively, of what we call cost-to-capture. Those are the cost-to-capture synergies. So the organic result, if you will, was better. Charlie will cover those numbers in a moment. Telenet also had a strong quarter, with robust operational performance in both broadband and mobile, adding 9,000 broadband subs and 15,000 post-pay mobile subs. They also grew fixed ARPU 1% as customers migrated to higher-tier broadband and multi-play packages. Now, look, fixed mobile convergence continues to be, has always been, the main focus at Telenet. They added 19,000 new converged customers in the quarter, and they've launched a new innovative fixed mobile package that they call One, which you can read about. Charlie's going to cover financials, but with 3% and 5% EBITDA and OFCF growth, Telenet's off to a good start to the year. And then lastly... Vodafone and Ziggo had a mixed quarter, to be fair. We continue to feel a bit of pressure on broadband. But at the same time, fixed ARPU was up 4%, and post-paid mobile subs were strong. Yerun and the team have really leaned into a number of programs to drive broadband growth, including smart Wi-Fi and broadband speed increases across the entire customer base. They're also on track, as I just mentioned, to double the gigabit footprint to about 80% by the end of the year, and then nationwide coverage in early 2022. On the mobile front, Convergence continues to deliver low mobile churn, which helped drive 51,000 postpaid ads in the quarter and push fixed mobile convergence penetration up to 45%. So it's good to see Vodafone Ziggo deliver another good financial quarter with revenue up 2% helped by double digit B2B growth and their 11th consecutive quarter of positive EBITDA growth with 3% in Q1. And that's despite COVID impacts. So wrapping it up, a strong quarter for us operationally with continued momentum in customer broadband and mobile growth and all guidance confirmed. Our strategy to build FMG champions and core markets is weeks away from our biggest milestone yet with the completion of the Virgin O2 deal. Meanwhile, the benefits of fixed mobile convergence continue to materialize around scale, synergies, competitive strength, and strategic optionality. And we remain committed to our levered free cash flow growth plan this year anchored around a steady buyback program that seeks to take advantage of what we all feel is a meaningful value gap in the stock. So with that, Charlie, over to you.