Liberty Global Ltd.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Liberty Global's fourth quarter 2021 investor call. This call and the 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 a listen-only mode. Today's formal presentation materials can be found under the investor relations session on Liberty Global's website at libertyglobal.com. After today's formal presentation, instructions will be given for a question and answer session. Page two 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 Security Litigation Reform Act of 1995 including the company's expectation 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 the Liberty Global's filings with the Security and Exchange Commission, including its most recently filed Forms 10Q, and 10-K as amended. Liberty Global disclaims any obligation to update any forward-looking statements to reflect any change in expectations or in the conditions on which any such statement is based. I would now like to turn the call over to Mr. Mike Freeze.

Hello, everyone, and thank you for joining us today. We've got a lot of ground to cover, so I'm going to skip the intros and get right into it. As usual, we'll be referencing slides that have been posted on the website, beginning with slide three, which introduces five key headlines for the past year. Before we get into these highlights, let's just offer perhaps the most important takeaway here. In what has been an extremely challenging two years for everyone across industries and markets, We've been fortunate that our people, our networks, and our business have performed really well. Over this period, we've retained and even expanded our talent pool despite hybrid working conditions. Our broadband and mobile networks delivered outstanding service despite massive increases in the demand for bandwidth. And for two years in a row, we've exceeded even our own internal budgets despite a global pandemic that's upended most industries. I just couldn't be prouder of our company and our operating businesses, and I think the results we'll be sharing today – as well as the strategic plans that underlie our guidance and our path forward, reflect that confidence and that enthusiasm. So consistent with those thoughts, you won't be surprised to have learned that we hit our 2021 guidance across our FMC portfolio, as well as our group free cash flow target, which we actually raised last November on our Q3 earnings call. And supporting this financial performance is strong commercial momentum that we experienced across broadband and mobile services, with the demand for connectivity continuing to exceed our expectations. Simply put, our FMC champions are delivering. We added over 1 million broadband and mobile subs in the year across our footprint, with a solid fourth quarter. Convergence continues to drive higher sales and MPS and reduced churn, with the number of broadband subs taking a mobile product from us now nearing or even above 1%. 50% in our four converged assets. And our track record of nailing merger integrations is helping us produce synergies in the UK and Switzerland that total around $14 per share on an MPB basis. Adjacent to our core operating platforms, we continue to invest in our ventures portfolio, which now stands at $3.5 billion, or about $7 a share. And that increase of 46% or $1.1 billion year over year is almost entirely attributable to appreciation of the value of our portfolio investments With new investments, net of distribution is totaling only around $300 million for the year. And then finally, total buybacks in 2021 totaled $1.6 billion, equivalent to 10% of our shares outstanding. We are committed to doing that again in 2022 and 2023, which is a great segue to slide four. I think it's always good to step back and refocus the investor's attention on the core value creation strategy we're pursuing. This is the narrative that defines what we're doing and why we're doing it. And that big picture, if you will, consists of three pillars. It starts on the left of this slide with our FMC champions. I just talked about those. These converged and highly profitable operating companies are the foundation or bedrock for value creation. And as you know by now, we had to get smaller to get bigger, divesting half our markets and putting our attention and capital into a handful of operating platforms that now reach over 85 million fixed and mobile subs and are either number one or number two in every country. As I've said before, this convergence – drives the scale we need to challenge incumbents, to negotiate with suppliers, to hire the best talent, and shape the markets we operate in. Convergence also delivers massive synergies to accelerate value creation and support investments. I think you know that. At the same time, Convergence delivers the brand, the products, and the market share to drive organic growth in customers' revenue and ultimately free cash flow, which for us, by the way, was up nearly 40% last year. And convergence delivers great strategic optionality to consolidate horizontally or even vertically, to monetize hidden assets like towers, and to control the future of networks in an accretive way. Those are the unique tailwinds that we're riding, but there are also some strong structural tailwinds in the European telco sector that are worth mentioning. First, the demand for connectivity has created commercial momentum and pricing power that should support growth in broadband, mobile, and B2B for some time. especially in markets like ours that are rational with strong consumer trends. Second, regulators seem less focused on us these days, which is a good thing, and that's fueled much-needed consolidation and paved the way for greater investment in and monetization of our infrastructure. And then third, with the current wave of fiber and 5G capex set to slow down over the next couple of years, private equity capital is swarming the sector in anticipation of significant free cash flow growth in the future. Now, the second leg of the stool is our growing ventures platform. I just spoke about that. And Charlie is going to spend a few minutes on this in his section. The key point is that all three strategic pillars of our investment strategy, tech, content, and infrastructure, are strategically aligned with or adjacent to our broadband and mobile businesses. And they're proven to be a great source of value creation and even dividends to the parent company. And then finally, the flywheel to both of these pillars is is our levered equity model of long-term fixed-rate debt, strong free cash flow, and consistent stock buybacks. Again, $1.6 billion last year and another 10% of the shares outstanding this year and next. And since we're funding that buyback with cash flow generated by our operating businesses, we continue to have over $4 billion of cash reserves to put to work in either core markets, ventures, or additional buybacks. Now, Charlie is going to present financial results, but I just want to comment briefly that, on our top line performance, which has been stable to improving across the group. So on the top right of slide five, you'll see our two most developed fixed mobile operations, Vodafone Ziggo and Telenet, both of which have benefited from fully converged fixed mobile operations and product offerings. Now, Vodafone Ziggo delivered its third year of consecutive revenue growth, around 2%, anchored by mobile and B2B growth. And despite an increasingly competitive broadband market, the Dutch market is remains largely rational, with two fixed-line players and three mobile operators. Telenet returned to top-line growth in 2021 of about 1%, supported by subscription revenue and modest ARPU growth. And more broadly, the Belgian market also remains rational, with both Proximus and Orange taking healthy price increases, which is a good precedent for Telenet's own price increases that occur generally over the summer. The two bottom charts show revenue growth for our two more recent fixed mobile combinations in Switzerland and the U.K., To summarize, UPC on the bottom left returned to revenue growth throughout 2021, with 1% in the fourth quarter compared to negative 4.5% in Q4 last year, so a big turnaround in the first year of integration, which was just solid execution by the Swiss management team. Inflation remains relatively low in Switzerland, so we're not expecting significant price rises by any of the operators this year. And Virgin Media O2 also saw steady top-line performance, basically flat revenue for the second half of the year versus negative growth in the first half. Virgin Media O2 is a large operation, remember, with 10.4 billion pounds of revenue and some year-over-year comparison issues in B2B and mobile, which Charlie will address. But the UK has seen a significant rise in inflation, and operators have followed suit, either based upon contractual increases of RPI plus 3.9% or on a discretionary basis. For example, PT raised contract prices over 9%, and we announced a discretionary increase of 6.5%. on our fixed business and a contracted increase of 11% on the O2 mobile base. So those should provide tailwinds for 2022, along with continued fixed mobile convergence cross-sell and up-sell offers. The side six provides a market-by-market look at quarterly subscriber growth over the last two years. And I think the main message here is the relative consistency of growth throughout the period. On the top left box, you'll see that Virgin Media O2 had another strong fourth quarter with 189,000 net ads. We outperformed the market again on broadband, supported by nationwide 1 gig speeds and record low churn, and the seventh straight quarter of broadband growth in both the lightning footprint and our existing footprint. That's really strong. And mobile growth was also solid on the back of the lowest churn in the market and our compelling FMC bundles, which we'll talk about in a second. The top right box shows subscriber results for Sunrise UPC in Switzerland, where we had 57,000 fixed to mobile subs in the fourth quarter, fueled by record high sales, and over 200,000 for the full year. We continue to add market share and broadband relative to our peers in Switzerland, and we lead the market in mobile editions with the best 5G network. Now, looking forward, we'll keep momentum in Switzerland with brand consolidation on the premium services under Sunrise and a more complete low-priced brand we call Yalo, which will offer a full bundle of services for the first time. The telling ad on the bottom left continues to add broadband subs at a steady clip, with some of the lowest fixed churn we've ever seen, around 8% per annum. And post-paid mobile ads picked up in the fourth quarter, helped by their one-up FMC bundle. And then finally, the bottom right shows Vodafone Zygo, where we remain the broadband market share leader, but have seen modest erosion in the broadband base over the last six quarters. We think this is attributable to a number of factors, namely promotional activity, the recent loss of some content rights, and fiber competitions. probably the only market where we're seeing any impact from fiber. The team's been addressing each of these issues with the completion of their one gig rollout this year and continued rollout of smart Wi-Fi and plume pods and over a million installed to date. And these efforts are paying off. Ziggo was just named the number one broadband provider in Holland based on download, upload, and latency. And Vodafone, the mobile platform, has the highest NPS of any operator in the Dutch mobile market. And then just a quick look at our fixed mobile convergence results on slide seven. You'll see on the left that we're approaching around 50% convergence in the UK, Belgium, and Holland, where one of every two broadband subs is taking a mobile product from us and closing in on 60% in Switzerland. Now, we've talked about the NPS and churn benefits of convergence. Those are well understood. But these bundles also drive the sales engine. For example, the launch of Volt in the UK is off to a great start. and has really supercharged the brand and our portfolio, bringing together the best of 1GIG fixed and 5G mobile, along with world-class entertainment services. We estimate that around 2 million O2 customers on the Virgin Media footprint use someone else's broadband, and the goal will be to convert them over time to the VMO2 bundle. It's the same strategy in Switzerland, where we estimate less than a third of the combined customer base, fixed and mobile, takes a converged bundle today. And the new Sunrise We portfolio drove record high sales in the fourth quarter, and we'll see additional product rollouts this year as we converge under one premium brand. And then I'll end my remarks with an update on our fixed network strategies across all five markets. Now, as you can imagine, we are spending quite a bit of time fortifying our lead in 1 gig services across the footprint and finalizing our roadmaps to 10 gig. And you've seen a version of this chart before, now with some updated stats and a status report by market. First, you'll see again with the orange bars that across our 30 million home footprint, we are already upgraded to one gig speeds everywhere, with the exception of Holland, which will go from 73% to 100% this year. You simply can't overstate how important it is to have speeds two to four times faster than your average competitor and to be able to offer those speeds to all households. The incumbent telcos remain committed to their own network upgrades, not surprisingly. And you'll see in the first gray bar below that at year end, their fiber reached around 30 to 40% of our homes, except in Belgium where it's only mid-teens. Even when you add alternates to the picture, those numbers don't move much, at least not on our footprint. Now beneath these bars, we've provided a quick update on our own plans and strategies by market. And I'll start with the UK, which is on the top of everyone's mind, I'm sure. Three key developments here. First of all, as our base case plan, we are accelerating our lightning build program in 2022. from around 330,000 homes last year to over 500,000 homes this year. We continue to see cost per premise decline to below 600 pounds per premise as we use more of BT's passive infrastructure, and that only improves the significant return on capital we're already seeing from this investment. Second, we completed the 50,000-home fiber to the premise trial that supports our previously announced intentions to upgrade our entire 15 million homes to fiber by 2028. Really important here, everything is checked out, and we remain confident about the technology, our suppliers, and the estimated cost of the project. And then third, and perhaps most importantly, we've recently launched a process to establish and capitalize a new fiber netcode together with financial partners that will build up to 7 million new greenfield homes outside our current footprint, eventually bringing our total fiber footprint to 23 million homes. That's essentially 100% of the urban U.K. market. Now, what makes this an attractive opportunity to prospective partners? Three things in particular. One, Virgin Media O2 will commit to be an exclusive anchor tenant of the network with its proven track record of achieving 30% penetration in new build areas. We've demonstrated that. Two, we'll open the network up to other ISPs on a wholesale basis, further increasing utilization and improving financial returns. And three, we have a proven capability to roll out new networks on time and on budget, having already built 2.7 million homes through Lightning. Now, turning to the other markets quickly in Ireland, we began our fiber-to-premise upgrade in the fourth quarter, and we're getting close on agreements to wholesale that network. Remember here, like the U.K., our upgrade costs compare really favorably to DOCSIS 4, so we've gone the fiber route. Sunrise UPC, on the other hand, will pursue a hybrid approach using DOCSIS 3.1, DOCSIS 4, other people's fiber networks, and some perhaps of their own. And they've just signed new agreements with Swisscom and SFN. which will give them a real advantage. We'll have 1 gig everywhere today and access to 10 gig wherever and whenever it's built. Telenet's making good progress with Fluvius on a fiber netco. I think you've heard about that from John and the team. And they should have agreements finalized this spring and services launched in the third quarter. Remember, with 70% utilization day one, this will be the de facto leader in wholesale access in Belgium, in Flanders. And my guess is you will see a strategic shift in the market towards Telenet as a result. There's just not enough market share left to support alternative network plans. And finally, Vodafone Ziggo continues to pursue an HFC solution supported by best-in-class speeds and capacity, but we will evaluate other options and opportunities as they arise. Now, as Charlie will discuss in a moment, 2022 will see a step up in our fixed and mobile CapEx. That shouldn't be surprising to drive these strategic and operating growth plans. And we'll also see a peak year for cost to capture in 2022 in order to achieve the immense synergies that we have planned for 2023 and beyond. So that's a good, hopefully, update and overview of our operations. And now I'll turn it over to you, Charlie. Thank you.

Thanks, Mike. I'm starting on a slide named Back to Stable and Growing Revenues. Full year 2021 rebase consolidated revenue growth for the group was 1.5%. Now, in the UK market, Virgin Media O2 saw revenue decline by 1.1% in a year on an IFRS performer basis, as growth in consumer fixed was offset by declines in mobile and B2B fixed performance. In Belgium, Telenet delivered 0.7% of revenue growth in 2021, driven by higher subscription revenue. And in Switzerland, Sunrise UPC delivered revenue growth of 0.5% in 2021, with higher consumer mobile and B2B revenues, partially offset by a decline in consumer fixed revenues. Finally, Vertopensica continues to maintain revenue growth momentum, achieving an increase of 1.9% in the year and delivering an 11th consecutive quarter of revenue growth. Moving to the next slide, consolidated adjusted EBITDA declined by 1.4% in the full year 2021, impacted by increased cost to capture in Switzerland. Without those costs, it would have been broadly flat. Virgin Meteor 02 EBITDA increased by 1% in 2021 on an IFRS performer transaction adjusted basis, including cost to capture costs of $81 million. Telenet achieved 1.2% growth in EBITDA in 2021, as its organic revenue growth was enhanced by cost discipline, with operating expenses remaining stable throughout the year. Sunrise UPC declined 1.8% in 2021, but did include $29 million of cost to capture. Excluding these costs, EBITDA was stable. And in the Netherlands, Vodafone Ziggo posted a 2% increase in 2021, driven by strong revenue growth, as well as good cost discipline. Moving to the next slide, at a group level, consolidated adjusted EBITDA less P&E additions declined 2.7% in 2021, with $126 million of cost to capture weighing on the full year performance. Urgent Media 02 saw IFRS pro forma transaction adjusted EBITDA less P&E additions decline primarily due to a step up in CAPEX as the JV continues investment in mobile and fixed infrastructure, in addition to $184 million of cost to capture expenses. Telenet and Switzerland both saw small declines in 2021, both driven by higher growth-related investments. Switzerland recorded $109 million of cost to capture, which reduced its 2021 number to $548 million. Vodafone Ziggo saw a 0.6% increase in adjusted EBITDA-less P&E additions, as its adjusted EBITDA growth was partially offset by an increase in P&E additions, which was largely due to increased investment in its customer experience, with an upgrade of the customer premise equipment, as well as the capacity of the fixed and mobile networks. On the next slide, we set out our free cash flow. We achieved our free cash flow guidance for the year, which we upgraded at Q3, with a nearly 40% growth in adjusted free cash flow to just under $1.5 billion under our guidance definition of free cash flow. Now, we're now changing our definition of adjusted free cash flow to now and prospectively include direct acquisition costs, or DAC, as we call it. The inclusion of direct acquisition costs represent costs that we incur related to acquisitions and or disposals, such as corporate advisory and banker's fees. And under this revised definition, adjusted free cash flow in 2021 was $1.4 billion. Now, we'll clearly highlight DAC as a line item to ensure comparability going forward in our reporting. The next slide sets out some details on our ventures portfolio, which has seen a step up in fair market value to $3.5 billion. This slide is aimed at giving better visibility on the key movements as Ventures continues to go from strength to strength. As you can see, our content portfolio is now worth around $2 billion, including our stake in ITB, around $600 million, Formula E, all three media, and an increased valuation for Univision following the completion of its merger with Televisa. Tech is now worth around $1 billion, including a recent uplift in valuation for Laceworks, which is a cloud security service provider. And in infra, we continue to see this as a key growth area, and in Q4, made a move in the energy space with the launch of our smart energy offering under the name Egg, focusing initially on a subscription-based EV home charging solution. Given the adjacencies of our smart digital home products, we see this as broadening opportunities to sell services to our customers, leveraging our existing operating infrastructure. Moving to the next slide, as you can see from the chart on average, we have repurchased around 7% annually of our outstanding shares every year from 2016 to 2020, and 10% if you include our 2019 tender following the sale of our German and Central European assets, purchasing in total around $11 billion of stock. We're now increasing our returns to shareholders and are committed to buy annually 10% of the shares outstanding from 2021 to 2023. And in 2021, we started this program and repurchased $1.6 billion of Liberty stock in a year, or around 11% of our year-end 2020 equity value. In 2022 and 2023, we will continue to execute against this 10% buyback commitment. And in 2022, we'll target buying 10% of the shares outstanding at year-end 2021, or around 50 million shares. Our balance sheet continues to remain strong, with our total liquidity arriving at $5.3 billion. Our debt position remains very strong, with average debt maturities of six years or longer in every operation. All our debt continues to be hedged into the currency of the underlying cash flows, and virtually all of it is fixed at a blended cost of around 3.4% across our consolidated debt silos and around 4% if you include Vodafone, Ziga, and Virgin O2. As interest rates rise, this should be a source of value to our shareholders. As part of our ESG agenda, we also refinanced over $2 billion of debt in Vodafone Zygo using a new innovative sustainable finance framework. Other ESG initiatives include the launch by Sunrise UPC of its ESG strategy, including Net Zero, Scope 1 and 2 Direct and Indirect by 2030. Together with ventures initiatives like Egg and Liberty Charge, our public EV charging joint venture in the UK, this is all part of our ongoing ESG agenda. And in 2022, we will look to finalize our net zero commitment, including Scope 3. On the last slide, we summarize our outlook for full year 2022. Starting with Virgin Media Road 2 guidance, on an IFRS basis, we expect to achieve improved revenue growth. Make single-digit transaction adjusted ever DA growth supported by improved top line and OPEX synergy delivery benefited from early synergy wins like the Virgin Mobile MVNO migration to the O2 network. This is excluding cost to capture for the year, of which we expect to incur OPEX and CAPEX cost to capture of around 350 million pounds, which is within our aggregate guidance of 700 million pounds. On cash distributions to shareholders, Virgin Media O2 is guiding to around £1.6 billion, including those from recapitalizations, as we aim to stay towards the five times leverage target, given the support of Outlook in the credit markets. Turning our attention to Switzerland, we expect stable to modest rebase revenue for the year, along with stable adjusted EBITDA, including cost to capture. We guide property and equipment additions as a percentage of sales to be 18% to 20%, again, including cost to capture spend. And cost of capture spends will be 150 million Swiss francs across the year, and a third of that spend bucket will be attributed to OPEX. The outlook for Telanet is revenue and adjusted EBITDA growth of around 1%, and property and equipment additions as a proportion of sales are expected to be around 25%, with stable adjusted free cash flow in the year. Finally, our Dutch JV is guiding to stable to modest adjusted EBITDA growth, with P&E additions to sales of 22% to 24%, reflecting a modest step-up in CapEx related to capacity and customer-related spend. Four-year shareholder distribution guidance is €550 to €650 million of cash returned to the shareholders and is stable versus 2021. Finally, on group cash flow guidance, we're guiding to $1.7 billion of distributable cash flow in 2022, representing another year of growth. Now, this does include an assumption for DAC to remain at the same level of 2021, though this could change depending on the level of M&A activity. And this is despite a $200 million year-on-year increase in our cost-to-capture spend in the UK and Switzerland and the commitment to investing in our networks that Mike set out earlier. We're now guiding to a new term called distributable cash flow. which is made up of the free cash flow that we received from our consolidated operations, as well as dividends from our joint ventures, including the proceeds that we expect to receive from any debt recapitalizations at Virgin 02, whilst remaining within its five times leverage target. Because of these high return investments, adjusted free cash flow will be down in 22 versus 2021. And with that, operator, time for questions.