Liberty Global Ltd.

Reform Act of 1995, including the company's expectations with respect to its outlook and further 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 the 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 the conditions on which such statement is based. I will now turn the call over to Mr. Freese.

Great. Thanks, operator, and welcome, everyone. We appreciate you joining us today for our third quarter results call. We've got a lot of ground to cover, so as usual, Charlie and I will deliver some prepared remarks, and then we'll get the rest of the team engaged in the Q&A. Just a reminder that we'll be referring to a slide presentation, which is available on our website and has a fair bit of useful data, so hopefully you can grab that while we're speaking. And I'll kick off on slide three with what we believe are the five key takeaways from the quarter. First of all, As you all know, we continue to experience a challenging macro environment in Europe today with record inflation, higher energy costs, rising interest rates, and volatile currencies. So while unemployment remains low and central banks are clearly taking action in our core markets, it's pretty clear that GDP growth forecasts are coming down and we remain cautious about the macro outlook for 2023. Now, despite these factors, our business continues to perform well. which is consistent with what we experienced in prior periods of economic dislocation. Our operating companies provide an essential service for individuals, households, schools, and businesses, and we don't see anything on the horizon that will change the demand for connectivity. In fact, we only see it increasing over time. Our Q3 results reflect this trend, with subscriber volumes and revenue largely stable to growing across the group. We'll drill down on these results in a moment. And we also saw a significant improvement in EBITDA growth in the quarter in three of our four markets. As Charlie will expand upon in a moment, the positive benefits from synergies, cost controls, and price rises more than offset the impact of wage increases and energy costs where we're fully hedged for 2022. And third, we're making excellent progress on our fixed to mobile network strategies across the footprint. Our fiber plans are advancing in the UK, Ireland, and Belgium, and 5G coverage is increasing in every market. More on this in just a minute. And fourth, we remain firmly committed to our buyback plans. With $1.7 billion, or about 14% of our outstanding shares we purchased this year, and a minimum commitment to buy back 10% of our shares next year. Now, our confidence in this strategy is emboldened by the widening gap between public and private values, our free cash flow profile, and the strength of our balance sheet. On the latter point, it's worth repeating that all of our debt is siloed long-term fixed rate and currency hedged, and we're sitting on a large cash balance. So not surprisingly, we believe our capital structure is a huge asset in this environment. And then finally, we're confirming all of our original guidance for 2022 at the operating company level, and importantly, our distributable cash flow guidance of $1.7 billion at Liberty Global. Moving to slide four, we're presenting here our usual chart on connectivity trends in our big four markets. There's always quite a bit of data included, so I'll begin with a couple of General observations. First of all, as you glance at the numbers, you'll see that we delivered stable performance in broadband. That's the orange segment of the bar charts, with growth in the U.K. more than offsetting flat to slightly down net ads in Switzerland, Belgium, and Holland. In line with historical trends, broadband sales picked up in the third quarter sequentially and year over year, supported by back-to-school promos. But we also saw elevated churn due to price rises and, in the case of Sunrise, the phase-out of the UPC brand. Meanwhile, it was a good quarter for postpaid mobile, which saw improved growth trends versus Q2, supported by the iPhone 14 launch in September and converged FMC offerings across the group. Now, looking at each market briefly, Virgin Media O2 delivered a sequentially better quarter in broadband with 19,000 net ads, despite a highly competitive backdrop and cost-of-living challenges. We estimate our share of gross ads was up for the quarter, bringing our national market share to a new high. and we continue to see good growth in our greenfield areas, what we have historically called lightning, which bodes really well for our network build plans going forward. In UK Mobile, we had our best quarter of the year on postpaid ads with 47,000, supported by our best-in-class churn, and we now have one million customers taking our converged Volt product, which offers double data, Wi-Fi guarantees, and average broadband speeds of over 400 megabits per second. We're proud of the fact that every second home in the UK is a customer of ours, but there's a long way to go. Average service penetration is around one and a half products per customer, so Lutz and the team have a lot to play for. In turning to Sunrise, broadband performance was stable on a sequential basis. Swiss broadband market remains competitive with higher promotional activity, and we continue to experience some added rotational churn as we phase out the UPC brand. More positively, Yellow, our digital first service, is performing really well, And Andre is seeing good inflow on the new Sunrise portfolio and strong speed uptake, including one gig services. In Swiss Mobile, we saw good performance across all the brands with 42,000 post-paid net ads, roughly in line with Swisscom, and helped by the Sunrise rebrand and our back-to-school campaign. In Holland, Vodafone Ziggo's broadband net ads remained negative at 9,000, slightly worse than Q2 as a result of intensified market competition. But on the positive side, churn was stable year on year, despite the price rise in July, and MPS has improved. Jeroen and the team remain focused on the broader customer experience, with one gig broadband now available to 93% of our footprint, and smart Wi-Fi pods in almost half the homes. Mobile postpaid ads in Holland were strong at 67,000, better than KPM, by the way, and supported by the higher uptake of Converge SIMS, the best MPS in the market, and our successful runner campaign. I don't have much to add to Telenet's results, which John Porter released last week. Overall, the Belgian fixed market continues to see low growth, with Telenet betting down the price rise from June and holding broadband subs flat in the quarter. On the other hand, mobile postpaid ads were the highest of the last four quarters, driven by our one-up bundles and summer web deals. Looking forward, Q4 is always a big sales quarter for us, especially in mobile, and we have strong campaigns underway now and approaching in each market. Slide five provides a breakdown on our revenue growth. This is the first time we've shown you this sort of data, but we think it helps illuminate some key top line growth trends. So before jumping into the numbers, I'll just highlight the pie charts at the bottom of the slide. The main goal here is to illustrate the diversity of our revenue growth mix with consumer fixed at roughly 30 to 50%, consumer mobile, including handsets at around 20 to 45%, depending on the market, and B2B, both fixed and mobile, between 20% to 25% of revenue. The numbers above these charts, the top, show Q3 and year-to-date revenue growth figures for each of these segments by country, with a bit more granularity around broadband and mobile service revenue. So rather than dive into each OPCO, I think it's easier just to make a few big observations here. First, as you'll see along the top, all of the OPCOs have generated modest revenue growth in the third quarter and year-to-date, with the exception of VM02, which was negatively impacted by a reduction in handset sales principally, some lapping of B2B contracts and competition in consumer fixed. The second big takeaway is that the consumer fixed business, that's the next line down, has been declining in all big four markets. And with both headwinds and tailwinds occurring here, on one hand, as you know well by now, we are generally losing video and voice RGUs like every mature market, albeit at a slower pace in the U.S., By the way, video today only represents, on average, around 15% of our total revenue. At the same time, however, we are growing in broadband, arguably our most important product, and roughly 50% of our consumer fixed revenue. In some cases, like at VM02, broadband revenue is growing as fast as 6% to 7%. The third big takeaway is that our consumer mobile business is strong, growing low to mid-single digits. And when you strip out handset revenue... which is zero margin and more volatile quarter to quarter, the trends for mobile service revenue are even stronger, supported by both postpaid additions and price increases. And then finally, you'll see that B2B is a consistent growth engine, as we challenge for market share from a relatively low starting point, usually 10% to 30%. B2B revenue growth is averaging mid to even high single digits, except in the UK, which had exceptional growth a year ago from some backhaul contracts. When you stand back from the chart, there's a lot of green numbers here with fixed consumer revenue as the only outlier, really. And on that front, we have clear strategies to manage our video base from both a profitability and penetration perspective while we drive broadband share and broadband revenue. And, of course, both mobile and B2B are consistent sources of revenue growth. In support of this growth in broadband, mobile, and B2B, we've been heavily focused on our network strategies in each market. And we summarized the latest updates for fixed and mobile on slide six. So starting with fixed on the left-hand side, even though we have the largest one gig network in every market today, we're committed to expanding that leadership position and we're making good progress on our announced fiber plans in the UK, Ireland, and Belgium. VMO2 is on track to add 500,000 greenfield homes in the UK this year. And we'll carry that momentum and that build engine into our recently announced and fully financed fiber JV, which is targeting an additional 5 to 7 million greenfield homes. The second part of that strategy, of course, is the cost-efficient upgrade of our existing HFC network to 16 million fiber homes, which is on budget and on track. We're taking a similar approach in Ireland, which is targeting 200,000 homes out of 1 million upgraded to fiber by year-end, and just announced its first wholesale agreement with Vodafone. That's a big milestone. At the same time, We've entered into a network access deal with another operator that extends our fiber footprint reach to an additional 450,000 homes on top of the million. And Telnet is making great progress on the recently announced netcode with Fluvius, focused on building fiber to 78% of Flanders, with DOCSIS to the balance. And then just a quick update on our mobile networks, summarizing the right-hand side of the slide. We're making strong progress on 5G across our footprint, with coverage ratios driven by spectrum availability and other factors. You'll see that Switzerland and Holland are nearly 100% 5G today and among the best mobile networks in the world, while the UK and Belgium are a bit farther behind, but that's due to slower spectrum availability and market conditions. Actually, we're expecting 50% coverage of the UK in 2023. And as you might expect, we're focused intently on the next wave of innovation in mobile, in particular, O-RAN, 5G standalone, and mobile private networks. Then finally, I'll end my bit on slide seven, which provides an update on capital allocation. We talk every quarter about the intrinsic value of our company relative to our public market cap. And regardless of the methodology you use, and regardless of whether you look at EBITDA, operating free cash flow, or free cash flow, the value gap is substantial. And many of you on the call today get that, I know. And nearly all of the analysts covering us have a buy rating on the stock. Now, while we want nothing more than to see that value recognized in the market, in the meantime, we have been aggressive buyers of our own shares. This slide illustrates that commitment in a number of ways. First, on the bottom left, you can see that since 2017 and inclusive of this year, we've purchased $12.5 billion of stock, or approximately 50% of the shares outstanding, and we're committed to acquiring another 10% of the shares next year in 2023. Also on this slide, for the first time, We've translated our buyback activity into a yield concept to help make the relative value point. When you look at it this way, from 2017 to 2021, we've returned an average annual yield of 11% to shareholders, and that number will be 14% in 2022. That's simply taking the buyback amount and dividing it by the average market cap for that period. Now, this buyback yield compares to an average dividend yield for our European peer group of around 5%, and is, we believe, a superior approach to shareholder remuneration, both in quantum and structure. As I mentioned earlier, we've done this while maintaining a rock-solid balance sheet, which is a huge asset at times like these. On the right side of the slide, we summarize those key data points again, each of which is worth calling out. First, we are sitting on significant cash, dollar-denominated cash principally. of around $4 billion on a consolidated basis, with $3 billion at the corporate level, and even more liquidity. And we've shown great discipline in the allocation of this capital, focusing on buybacks, opcos, and ventures, and mostly funded through free cash flow. And second, our debt position is very secure, with no near-term refinancings or floating rate exposure, an average cost of capital at around 4%, and a seven-year average life And importantly, all of our debt is siloed, meaning there's no debt at the parent company, and it's hedged into the local currency of the operating company. And then finally, we're able to complete three key financings before the debt market's closed, raising over $9 billion in new capital on really good terms for our UK Fiber JV, our Belgian Netco JV, and our recap of VMO2. So just to wrap it up here before I turn it over, despite macro challenges, we are reconfirming our original guidance across the board. That's a pretty strong indicator of our ability to deliver in difficult times. Our connectivity trends are solid and support a diverse and growing mix of revenue. While synergies, price increases, and cost controls are helping us deliver strong EBITDA growth. We're committed to the right balance of FMC-related innovation and network investment to ensure we maintain and expand our leadership position. And our approach to capital allocation and buybacks is unwavering. supported by our free cash flow profile and a strong balance sheet. Charlie, over to you.

Thanks, Mike. On the next page, we provided a summary of the revenue profile in our four key markets. Overall, we've managed to deliver revenue growth in three of our four markets amidst challenging market conditions. And despite some pressure and fixed, price adjustments in Benelux were supportive and mobile growth remained strong. VM02 reported a modest decline in overall revenue, with declines in consumer fixed, B2B fixed, and low margin handsets not fully offset by strong mobile growth. I'll give more color on this in the next slide. In Switzerland, strong mobile momentum and growth in B2B more than offset the pressure from lower consumer fixed revenues. Lower fixed line revenues were driven by changes in ARPU mix and softer fixed volumes relating to the phasing out of the EPC brand last quarter. This impact will likely continue in Q4 as we reposition the UPC subscriber base. And in the Netherlands, we saw a return to revenue growth supported by a strong performance in mobile and B2B, coupled with the July price rise benefit and fixed. The main pressure remains in consumer fixed, where the market remains very competitive. The strongest revenue growth was seen in Belgium this quarter, driven by their mid-June price rise of nearly 5%, higher roaming revenues and strong ICT delivery. On the next slide, we provide some detailed analysis of our UK revenues. Overall revenue declined 0.6%, but the key drivers of that decline are lower sales in our lower margin and largely variable cost products, such as handset sales and video, where like the US cable operators, we continue to slowly lose subscribers. And it's important to remember TV profitability is materially lower versus broadband. And increasingly, we're able to drive more variable content costs in this space. We also continue to lose our fixed telephony customers, as we have for many years. And Mike has highlighted earlier that the core high-margin broadband business is actually growing very strongly, but it helps explain why underlying consumer fixed revenues were down 1.6%. Our B2B revenues from large fibre contracts are also very lumpy, which can distort the underlying growth rate. For example, in Q3 last year, we had significant fibre sales that weren't repeated this year. These connected circuits remain a growth business, but the phasing of these larger sales can vary quarter to quarter. If you strip out these lower margin products and those B2B fixed revenues, underlying revenue growth was actually positive at 1.4%. This performance was supported by an outstanding mobile service revenue evolution of more than 4% year on year, which saw further acceleration in Q3 as the April price increases continued to flow through and postpaid volumes kept growing. Moving on to our adjusted EBITDA performance in the quarter, BMO2 delivered accelerated EBITDA growth of 8%, but this did include a $35 million legal settlement one-off. Excluding this one-off, growth would have been approximately 3% lower. This performance was driven by synergy execution and price rises, with MVNO migration set to contribute more savings in Q4. $18 million of OPEX cost to capture was included in EBITDA this quarter. Sunrise saw EBITDA decline 2.3% as tailwinds from the MBNO synergies faded, combined with a weaker fixed ARPU mix. Other drivers of this decline included increased acquisition and marketing costs, which were partly offset by labor synergies. EBITDA included $6 million of cost to capture in the quarter. As implied by our continued guidance for flat EBITDA growth in 2022, we expect a relatively tough fourth quarter, giving ongoing pressure in fixed and lower synergy tailwinds. Vodafone's Zygo saw a return to EBITDA growth of 1.3%, which was driven by strong cost control and support from price rises in fixed, despite headwinds from inflation, in particular energy. And Telenet reported strong EBITDA growth at around 5%, driven by price rises and continued cost optimization offsetting energy headwinds. Turning to our capital allocation slide, we continue to be on track relative to guidance across the four key opcos in terms of capital intensity. Excluding the cost-to-capture investments in the UK, our capex for sales for the nine-month year to date remained around 20% of sales and modestly below in the case of Sunrise. We expect to pick up in capital intensity in Q4, as you've seen historically, but overall we expect to meet our capex guidance for the group and our core markets. On a consolidated basis, our capex split remains around half on product enablers and CPE and the other half on baseline capacity and new build upgrade. And lastly, turning to ventures, the fair value of the portfolio fell slightly to $3 billion, driven primarily by declines in the ITV share price, while our technology and infrastructure valuations remained stable quarter on quarter. Moving to free cash flow and the key drivers, year to date we delivered $979 million of full company distributable free cash flow. The third quarter, as usual, saw relatively higher interest payments offset by higher overall dividends including $49 million from Virgin Media 02, along with $267 million coming from our share of the recapitalization, and $58 million from Vodafone Zygo in the quarter. And we remain on track to deliver $1.7 billion of distributable free cash flow for the full year 2022 at the original guidance FX rates. Turning to our guidance, today we are reiterating all Opco guidance across the portfolio, following a resilient performance during the quarter. We're on track to deliver our group guidance of $1.7 billion of distributable free cash flow for the year, excluding the impact of FX. And we continue to execute on our buyback commitment of $1.7 billion in 2022, having bought back 73 million shares year to date. And today we actually have 459 million shares outstanding compared to around 900 million at the end of 2016. As Mike mentioned, we'll be executing on at least another 10% share buyback in 2023, so you should consider that a floor for the next year in terms of what we might do. And to that point, our balance sheet position remains strong, with $4 billion of consolidated cash at the end of the quarter, of which $3 billion is at the group corporate level. And with that, operator, I'm handing over for Q&A. Thanks.