Liberty Global Ltd.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global's second quarter 2024 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 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 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 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 Fries.

Okay, hello everyone. Thanks for joining the call today. We've got a lot of ground to cover, so I'm going to jump right into prepared remarks. My senior team is also on the line as usual, so I'll be involving them in the Q&A when we get there. So I'm starting on our Q2 highlights slide. On our year end call in February, you'll all remember that we laid out what I think is a clear strategic plan. Which included three core elements. First of all, maximizing the intrinsic value of our FMC operations. That's critical. Second, using the venture's portfolio to create liquidity to support those operations and to invest in strategic platforms. And then most importantly, putting all that together to both create and deliver value to you, shareholders. At the top of this slide, we provide an update on each of these core initiatives, beginning with Switzerland, where the sunrise spin, which we have talked quite a bit about, is on track for the fourth quarter of this year. The purpose here is to hand shareholders a significant and well deserved dividend of what analysts are estimating is around $12 per Libre Global share. As a reminder, sunrise represents only about 20% of our proportion at EBITDA, and that excludes, of course, the value that might be attributed to cash and ventures in our stock price. Now those sunrise valuations of $12 or Liberty Global share are supported by 1.5 billion Swiss francs of deleveraging that we will fund pre-spend. And it's supported by a commitment for sunrise to pay an annual dividend of 240 million Swiss francs beginning next year in 2025. So those two things are anchoring that $12 per share. Now we scheduled the sunrise capital markets day. I'm sure you saw that for September 9 in Zurich. Of course, there's going to be a live webcast and replays and management is going to hit the road right after that. So hopefully you'll have a chance to connect with Andre and his team. They are an outstanding group. I'm sure you'll see that immediately. You also should stay tuned for more details on the spin mechanics and logistics as we finalize the SEC process and start working towards the shareholder meeting in the fall. So a lot of communication will be heavily engaged and making sure you understand everything that's happening there. Now we've got three key strategic updates in the UK as well. Same strategic path.

This

month, we announced a fairly comprehensive agreement with Vodafone in the UK, which strengthens and extends our mobile network sharing agreement, which we've had for some time. And that's going to occur, whether or not the merger with three goes through and it includes the right for VMO2 to purchase spectrum. Should the deal be approved and both of these address some of the concerns raised by the CMA including rebalancing spectrum among operators, but in either case are highly accretive to VMO2. Then on the fixed network front in the UK, we've now reached 5 million fiber homes across VMO2 and Nex fiber and that build out an upgrade is ramping up and accelerating. Also, our announced plans to create a UK net co or on track for the first half of 2025 with financing discussions probably commencing really Q4 this year and I'll give you a bit more on these developments in a moment. Moving to the Benelux where we are also making meaningful strategic progress at the country level in Belgium and Holland. That progress is going to support our ambition to create a regional operating platform with scale with synergies and with strategic optionality. So, for example, in Belgium, we announced a preliminary agreement or MOU with Proximus to avoid overbuilding each other with fiber and about 2 million homes. And just as importantly for each of us to use the other's network in those areas so we can maximize utilization. In the Netherlands, the 5G spectrum auction finally occurred and we were able to recently acquire 100 megahertz of three and a half gig spectrum well below the expected price we thought we'd pay. And sticking with Holland, we could not be happier of the hiring of Stephen Van Royen who will become CEO of Vodafone Ziggo in September. I've known Stephen a very long time and this is not the first time I've tried to hire him, by the way. Both we and Vodafone recognize right away his deep expertise and brand and production and innovation. That he developed over 17 years at Sky and we're convinced he's going to bring the right energy, operational focus and strategic direction to this critical market. And then finally, as I just mentioned, we're using our Ventures platform to provide a source of capital that we can rotate into other strategic opportunities. And also as an investment vehicle for innovation and new scale based businesses that align with our core value creation goals. Now we're delivering on that first objective with 650 million of asset sales in the last six months, a large portion of which will support the leveraging of sunrise pre-spin. And we remain focused on larger platform opportunities, as you can tell by our plans to increase our stake in Formula E. And our increasing commitment to digital infrastructure and I'll talk about those in a moment. Now moving from those strategic initiatives at the top of that page to our regular Q2 highlights. I'll start with our balance sheet and capital allocation model, which are in great shape as we point out on every call our debt profile is long term. Fixed rate and siloed with no debt at the parent company and no material maturities until 2028. We're also sitting on a cash balance equals to roughly half our market cap. And by the way, we continue to shrink that market cap through an aggressive buyback program, which saw us repurchase 5% of our shares here to date towards a planned 10% of shares through year end. We also continue to both invest in growth and execute at the core FMC operating level. That includes powering through headwinds. We talk about this as do our peers every quarter.

We

are facing an increasingly competitive marketplace. With consumers who continue to feel the stress of inflation and macro challenges as You'll see in a moment while our fixed ARPUs are rising or stable and that's great news. We're feeling pressure in the mobile sector from promotions and from flanker brands. Despite that we are confirming all of our 18 different guidance metrics. That's right. 18 different guidance metrics we provided with the exception of one which is revenue growth. Vm O2 we are lowering that as a result of slower hardware sales in the mobile business. Now these are low margin revenue sales at best. So we're still going to hit our EBITDA and free cash flow guidance in the UK. That's important. And I'll end this slide by emphasizing that we are also seeing some tailwinds in particular as we begin to read the benefits of four things. Number one, Our investments in fiber and 5G which remain substantial. Number two, the growth in our flanker brands. And number three, our access to new revenue streams and new homes generated by our fixed network strategies. And then lastly, the hidden value of our digital infrastructure assets. I'm going to touch on all of these. The punch line is that we feel we have a pretty good operating and strategic toolbox here to help us work through this transition and ultimately deliver that value to share what we've been talking about. So moving to operating highlights. So we provide our traditional KPIs on this slide, the big FMC opcos. I'm going to move clockwise from top to left. Starting at the top left, you'll see that Sunrise had a really strong quarter leading into the spin, which is always good. Broadband and postpaid mobile ads were 38,000. That's nearly double the prior year and up around 20% sequentially. This is also the third straight quarter of broadband growth improvement in Switzerland driven by reduced churn on the main brand. And continued strong inflow. We're also benefiting from progress on the migration of the UPC base, which we've talked about for four or five quarters now. That should be largely completed by year end. Those factors, along with the price rise last summer, have helped deliver four straight quarters of fixed ARPU improvement. Also delivered another strong quarter of mobile postpaid growth supported by improved churn and our Flankr brand, Yalo. Continues to be highly competitive. This is a theme everywhere with budget brands, heavily discounting and that's adding pressure to mobile ARPUs. Moving to Belgium, TeleNet's results were largely consistent with prior quarters and up from Q2 and Q3 last year when the company was managing through IT challenges. We lost around 5,000 broadband and postpaid mobile subs in the quarter in a very competitive Flemish market with intense promotions, by the way, ahead of this anticipated mobile launch from Digi. To combat that, we are executing a multi-brand strategy, as you know. Most importantly, though, we now have a nationwide FMC Flankr brand. That's available not only in the Flanders, but also in the south of Belgium, where we've just launched and are targeting a modest 10% market share. Everything's off to a good start there. And then finally fixed ARPUs at TeleNet continue to grow mid-single digit. That was helped by the price rise last year with this year's price rise of 3.5%, taking effect early June and also landing well. And then moving to Vodafone Ziggo, it was a challenging quarter in the Netherlands operationally. The financial results were outstanding. Charlie will cover those numbers. Vodafone Ziggo delivered a steady quarter on broadband with slightly improved losses of 23,000 in a highly competitive market. The good news is that churn is declining on the back of extensive programs that provide more value to customers, including speed increases, more entertainment, customer experience improvements. Fixed ARPU continues to grow in the mid-single digit range in Holland, supported by the retention of last year's .5% price increase. And after steady gains, post-paid mobile subs turned negative in the quarter, but that was driven primarily by the loss of low ARPU B2B contracts with local government. Similar to fixed, post-paid mobile ARPU was up mid-single digit, supported by the price rise last October. Looking forward, Ziggo implemented a .5% fixed price rise in July, which is landing well. And is also supported by our exclusive UA for broadcasting rights, a strong FMC proposition, and I think importantly, our successful loyalty program called Priority. And then finally, in the UK, despite a tough trading environment, Virgin Media 02 delivered its fourth straight quarter of improved fixed ARPU results with 3% -over-year growth in the second quarter, reflecting our focus on value over volume and the retention of price rise benefits. We continue to take a higher share of gross ads in the broadband market as broadband growth in the next fiber footprint continues to build steadily and is expected to ramp in the second half. However, as with any price rise quarter, we have seen a moderate increase in churn with overall broadband losses of 12,000 broadly in line with the prior year. The post-paid mobile market in UK continues to be soft. You're hearing that, I think, from all of the operators, especially at the premium end with weakness in the handset market continuing. Now, while O2 churn remained stable, Lutz and the team are implementing a series of measures to rebuild post-paid mobile momentum in the second half. That includes proactive campaigns to drive retention, strong offers around new hardware launches from Samsung and Google and iPhone later this year, renewed energy in our FMC packages, and better performance in the indirect channels. So, 2024 is a transition year, as we've said in the last few quarters here, and we are focused, I know the team is focused on preparing VM02 for a strong 2025. Again, each of the opco leads are on the call so we can dig into any of these markets during Q&A. Now, we move to the next slide. We've talked a lot about our fixed network strategies, in particular our fiber bill plans, and then more recently, our efforts to delay certain of our businesses by separating out our fiber and HFC networks from the service platforms. Now, we've already achieved this in Belgium, and we talked about it with the formation of WIRE, which together with our partner Fluvius now owns and controls the Telenet HFC network, passing 4 million homes plus or minus, with a commitment to deliver fiber to about 80% of those homes over time. WIRE is already wholesaling a fixed network to Telenet and to Orange Belgium across Blenders, and representing about 50 plus percent utilization of the network. And they also recently announced you might have seen an MOU with Proximus to share the fiber build out in around 2 million homes, and to hold by access from each other, which would bring utilization of the WIRE network in those areas to over 80%. It's among the highest in the world. Similarly, we've announced our intention to create a net code like WIRE from our 16 million fixed network passings in the UK, 3.8 million of which have already been upgraded to fiber. Together with our JV, which we call NextFiber, VMO2 will ultimately have access to between 21 and 23 million fiber homes in the UK. That's about 80% of the urban market. And the combined network would be available to third parties, potentially driving even higher utilization and new found wholesale revenue. So why are we doing all this? What is the rationale for what appears to be from the outside of relatively complicated restructuring of our operations into netcos and servcos in these two markets? I think the answer is pretty straightforward, actually. On the netco front, once the physical infrastructure is isolated in these platforms, they can generate stable and high margin cash flows driven primarily by the fixed monthly wholesale payments they receive from retailers for utilization of that network. As the utilization rate climbs, the cash flows improve, driving long term returns to financial and strategic investors.

These platforms

also allow us to attract new capital, which helps accelerate our network upgrade and extension plans, and they can facilitate in market consolidation of both network and operating platforms. The remaining servco can also benefit from the separation. What you end up with is an asset light, typically a digital first business model that prioritizes customer experience in order to differentiate from other retailers. There's more focus inevitably on innovation to drive new revenue streams, as well as the opportunity for in market consolidation of other B2B and B2C service providers. The far right hand side of the slide demonstrates the hidden value in our network assets. What we show here are nine recent fiber transactions that have been concluded in Europe, where the median EBITDA multiple in those deals was about 18 times. Now, of course, there's a wide variance of valuations, which reflect things like the capex profile, the amount of overbuild in the market, forecast utilization rates, and what the wholesale revenue opportunity is. But if you compare that to integrated telco multiples of mid single digit, where most of us are trading, this is obviously a significant premium. These are not easy transformations. The execution risk can be high, but we're focused, and we have focused our resources on the two markets where this will most easily be achieved, and where the dynamics will generate the most significant value creation for shareholders. So stay tuned. Now, before handing it over to Charlie, I'm just going to spend a moment on some developments in our 3 billion Ventures platform. To begin with, in October of last year, we committed to 500 million to a billion of non-core asset sales before mid 2024. Good news, we've achieved that goal with over 650 million of proceeds through Q2, and we're targeting another 100 to 150 million before year end. This is consistent with our strategy of rotating capital, as I said, out of Ventures and other non-core holdings, and into higher growth or higher return opportunities. Obviously, the sale of all three media and the use of that 400 million to deleverage sunrise pre-spin is an excellent example of that. We also remain focused on building larger positions in scale businesses like Atlas Edge in the digital infrastructure space, where our portfolio now totals a billion. And Formula E, where we just announced our intention to increase our stake from 38% to 65% at what we believe is a very attractive valuation. Now, interestingly, we haven't talked a lot about Formula E, so on the right hand side here, we provided a short update of this platform. After just 10 seasons, this is one of the fastest growing motorsports in the world with over 400 million global fans, races that span four continents, and revenue growth of nearly 20%. As a reminder, we have an exclusive license with the FIA for electric racing that runs another 15 years. And we're riding the tailwinds, obviously riding the tailwinds of vehicle electrification with the support of car brands like Porsche, Jaguar, McLaren, Maserati, and Nissan, who are also committed to that. Next season, the Gen 3 Evo car will be 30% faster than an F1 car at the 0-60 mile per hour range, with massive headroom on speed and performance moving forward. And the format of this race is extremely exciting with nearly twice as many competitive overtakes per race as F1, and every champion pretty much so far being decided on the final weekend of the season. Also important to note, Formula E has been net zero since day zero, which is another major selling point for sponsors and for fans. We definitely have work to do, particularly on the monetization of media rights globally and other things. This is work in progress after 10 seasons only. I think it took Formula One 75 years to get to where it is. And we're going to continually refine the racing series along with the FIA and with iconic racing partners like Andretti and Penske. I think the bottom line is with minimal future investment, the upside here we believe is significant, and we are squarely focused on realizing that potential. So Charlie, over to you now.

Thanks, Mike. The next slide sets out the quarterly revenue and EBITDA for each of our four key markets. And we saw similar trends to Q1 with broadly stable reported revenues across all our opcodes in the second quarter. Sunrise delivered stable revenue in Q2, supported by the July 2023 price rise and continued growth in mobile subscriptions and B2B. And because there's no price rise this year, the second half of the year will not see a price rise benefit. Terminant 2 posted stable revenue in Q2 despite slightly weaker mobile performance. And Virgin Media 02 reported broadly stable revenue, but excluding the impact of the next fiber construction, saw a revenue decline of around 4%. Now, the key driver of this decline continues to be lower year on year hardware sales, which although they're very low margin and have a limited impact on the EBITDA of the company, do impact top line growth. Now, despite this, overall mobile service revenue and fixed subscription revenues did grow. And encouragingly, as Mike noted, in fixed, we saw improved R2 trends supporting fixed revenue growth. At Budaphone Zygo, revenue was up one and a half percent this quarter, supported by price indexation, continued growth in mobile and B2B fixed revenue. Q2 was another record quarter of strong mobile service revenue growth. Moving on to our adjusted EBITDA performance this quarter, Sunrise posted stable adjusted EBITDA growth, including cost capture, driven by the revenue increase in the quarter and lower OPEC, particularly in labor costs and marketing spend. Terminant's EBITDA was down around 9% year over year, reflecting a tough comparison base against Q2 of last year. Now, this included a 10 and a half million euro one time benefit they got last year. In addition to this, the decline was due to higher staff related expenses following the mandatory one and a half percent wage indexation and growth in our overall FTE base. This quarter, we also had increased sales and marketing expenses, including the FMC launch in the south of the country compared to the same period last year when we scaled back our spending due to IT platform migration issues. Virgin Meteor O2's adjusted EBITDA decreased 1%, including next fiber construction, as the quarter saw reduced contribution for B2B fixed. Additionally, Q2, BMO2 continue to invest in the future growth drivers, largely in IT and digital efficiency programs. And Vertifone and Zygga delivered around 8% EBITDA growth, driven primarily by the reversal of energy cost headwinds and lower consultancy service costs. Now this is partly offset by wage increases due to the new collective labor agreement. In the first half of 2024, we saw consolidated free cash flow and central spend on track. And as is the case in previous years, anticipate cash distributions from the JVs will be realized in the second half of the year. In relation to our cash position, our consolidated cash balance was $3.5 billion at the end of Q2 2024. And the quarter saw cash inflow related to operations of $0.3 billion. We realized net cash from our ventures of $300 million and share buybacks were around $170 million during the quarter, consistent with our guidance for up to 10% buyback in 2024. On ventures, we closed Q2 with a fair market value of around $3 billion, following the all three media disposal. We made net investments around $100 million in ventures, focusing on Atlas Edge and Edge Connects, both our data center assets and part of our infra pillar, where we see strong growth potential and are focused on creating new unicorn assets. And finally, turning to our sum of the parts, we'd like to highlight the key value drivers of our stock on a per share basis. We believe the current share price of $18 to $19 per share still does not reflect the inherent value of the business. And we're committed to closing this valuation gap. And the Sunrise Spin is the first step to do it, encouraging the current average analyst valuation per sunrise of $8.4 billion Swiss francs, which is up from $8 billion Swiss francs in Q1, now implies a $12 per share contribution to the current Liberty Global stock price. And as we go through the Sunrise Spin off execution, our aim is also to unlock the remaining value sitting in cash ventures and the other FMCs with Sunrise and the Rump trade separately. So when taking the book value of cash listed stakes and unlisted ventures, which sums to around $14 per share, and combining with the Sunrise $12 per share, the implied value of a Liberty Global share is around $26 per share. This is even without attributing any value to the remaining FMCs. The implied value is around the current average analyst target price of $25 a share. But if the Sunrise value is realized over time does imply very substantial upside on RUMCO from a performer value of $7 a share to $13. Turning to our debt stack, we continue to have a strong position, maintaining long term fixed debt profile of around five years. We also continue to hold our cash and liquidity at the parent company with the debt stack siloed at the key FMC assets. Now our debt silos do not face material maturities until 2028 and we remain proactive in extending the tenure. This is facilitated by our expensive swap portfolio with the swaps independent of the underlying bank debt. And importantly, this allows us to remain opportunistic and strategic in the market and strengthens our attractive debt position. At Sunrise, we're proactively deleveraging ahead of the spin to ensure an initial leverage range of three and a half to four and a half times. The one and a half billion Swiss franc deleveraging, which is approximately $1.7 billion, will be funded by Liberty Global corporate cash, Sunrise 2024 free cash flow and the all three media proceeds which we received in Q2. And lastly, I'd like to give you an update on our 2024 guidance. At VM02, the company expects to deliver a low to mid single digit decline in revenue, excluding next fiber construction. Now this is a decline as a result of the lower margin hardware revenue, which continues to be a headwind. However, the other revenue streams are expected to be stable and adjusted EVIDA, adjusted free cash flow and all other 2024 guidance is reiterated at VM02 as the company continues to invest in its growth drivers. To underpin this, VM02 has had a solid start to the year with a slightly better than 2% EVIDA decline. I also want to additionally reconfirm all other guidance at Telenet, Sunrise and Butterfenziger. And that concludes our prepared remarks for Q2 2024 and I'd like to hand over to the operator for Q&A.

The question and answer session will be conducted electronically. If you would like to ask a question, please do so by pressing the star or asterisk key followed by the digit one on your phone. In order to accommodate everyone, we request that you ask only one question. If you are using a speakerphone, please make sure your mute function is turned off to prevent any further questions from being answered. We will pause for just a moment to give everyone an opportunity to join the queue. The first question is from the line of Carl Murdoch-Smith with Barenburg. Your line is now open.

Hi, thank you very much. I just wanted to ask about Virgin Media 02 and the fiber rollout there. So fiber now passes 5 million premises. But of that, how many are actually ready for sale and how many broadband customers do you have on the fiber infrastructure, particularly in upgraded cable areas? The reason I'm asking is there were a few reports a few months ago that you faced delays in being able to launch services to fiber customers in Project Mustang areas where there was previously cable network. Thank you.

Well, I mean, I'll let Luce dig into the details. I'm not sure we're disclosing that much information, Carl. But the 5 million breaks out into both NexFiber, about 1.3 million, I believe, and the balance on our VM02 upgrade or fiber up as we call it. We certainly connecting customers on NexFiber. I'm not sure we've disclosed our penetration rate. Luce and Charlie jump in here if you think we have it. Pretty sure we haven't. And then we're taking our time on converting HFC customers to fiber, just getting ourselves ready to do that more than anything. And that's as much around how we package and market products and services than where we build or where we don't build. So in terms of homes ready for service, Luce, I don't believe we're providing that detail. That's how the fiber homes break out. But clearly we're gearing up to take advantage of these fiber homes or we wouldn't be building them in the first place. But jump in here if you think there's more we're going to say, Charlie or Luce.

No, nothing to add. I mean, we are only telling...

Sorry. Just saying we haven't provided any numbers.

Yeah. Yeah,

okay. Go ahead, Luce. Yeah, I was... The only thing I can add is that at the moment we are well positioned with our HFC network with our 60 million homes. So therefore we have taken a conscious decision not to start selling fiber. But as Mike has said, we will do. And you see in our churn numbers that at the moment customers are not leaving our network because of fiber.

That's great. Thank you.

Up, Reed. Next

question is from the line of Maurice Patrick with Barclays. Your line is now open.

Yeah, thanks guys for taking the question. Yes, Maurice here from Barclays. Sorry for the UK question. But yeah, I see in the financials you lost, I think it was 12,000 broadband customers, but you had growth in next fiber. I'm just conscious listening to the... Looking at the BT numbers yesterday, they saw 190,000 odd losses of customers in open reach, which they said they were seeing increased loss to competitors, but also a soft broadband market. So I'm just curious as to giving you presumably lost about 30,000, 40,000 on the legacy footprint. Are you seeing more impact from multnet? Is it a soft market? What's driving that shift and should we see improvements in the coming quarters? Thank you.

Go ahead, Lutz.

Yeah, thank you for the question, Maurice. So in the net app development outside next fiber, we are a bit better this year in a price rise quarter compared to last year. So therefore, yes, I agree. All net are increasing their activities, right? They build less, but they try to sell less. They sell more and therefore you see aggressive promotion. But in the scheme of things, we managed to keep our base stable in a price rise quarter. And we have now managed also to increase the ARPU and the fixed service revenue first time since three years. And this is a result of a completely different way of working. Right? We understand every household we are serving. We have we run 25,000 campaigns in parallel. And we come up with individual product and price combination. And therefore, we are able to maximize retained revenue, something we have teased for several years, and it starts now to really pay off since Q3 last year. On the next fiber area, we haven't disclosed any numbers, but it is fair to say that we are a bit behind in our ambition. The reason for that is that fiber is a new product. So we had to also deliver the video product. It's a bit of different sales. It's a different cell process. It's a different provisioning process. But we are getting better and better. And we stick to our ambition that end of this year, we have sold so many fiber customers into the next fiber area that that turns into a growth driver for 25. Yeah, but I think it is simply a ramp time. We lost a couple of months there. But month over month, we face record months in sales and provisioning. And we want to sell and we will much so much more in second half. I hope that that that answers your question.

You just maybe on the phasing sorry, sorry to quick follow up. But if you look at the cadence of NetAd and ARPU, it should be maybe different this year, given the way the price increases put through.

I mean, it could be. But the majority of our customers are in contract. So we know exactly how many will be out of contract. So we don't expect a massive different phasing there. A little bit it could be.

Thank you. Operating.

You. The next question is from the line of Ulrich Reif with Bernstein Society General Group. Your line is now open.

Yeah, thanks very much. I was just a little bit about the Belgian memorandum of understanding. So the idea for the mutual wholesale access, could I just confirm that that's at the active or the passive level? And also, when you envisage sort of an agreement eventually, obviously, the terms aren't really announced and finalized yet. But but do you do essentially foresee this this this JV to JV sorry, this carve up to offer terms to each other to the to the partners on a reciprocal level that are different from the terms that are that are offered to other takers by virtue of the underlying agreement or are the wholesale terms essentially going to be open to all takers at the same level? Thank you.

Yeah, that's a really important question. And I just remind everybody that the contract is under is now being reviewed by the regulator. So we're hopeful they'll see it the way we see it as a very constructive development for the market and for the operators. John, do you want to address the specific issue around wholesale rate to the extent we're disclosing that at all?

Yeah. Yeah, but first of all, for clarity, it is a passive reciprocal passive deal ultimately with Proximus where we'll be building 60% and Proximus 40% in the collaboration zone, which is about 2M of the of the homes path in in Flanders. The principle of it being open and non discriminatory is also already a public principle articulated by the regulator. And, you know, we, we do have a regulatory process, which will be underway here very shortly. But like I said, the principle of of a non discriminatory regime will will be in place and part of that agreement.

Thank you very much.

Thank you. The next question is from the line of Polo Tang with UBS. Your line is now open.

Hi, thanks for taking the question. It's on Switzerland. Can you maybe talk through what you're seeing in terms of competitive dynamics in the Swiss market? And can you maybe comment on a few specific factors? So, for example, what's happening with promotional activity specifically in the Swiss market? Also, is there still a drag on financials and KPIs from the retirement of the UPC brand? And then also going into Q3, Q4, should we expect your Swiss financials to see slower growth as you start to lap your 4% price rises from July 2023? Thanks.

I mean, I'll let Andre address the competitive dynamics. And I think I mentioned in my remarks, Polo, that, you know, we believe the UPC migration will be done by year end and will have an increasingly smaller and smaller impact on results. And I don't believe we've provided quarterly guidance, but you can take a look at where we are year to date through the mid-year and where we ought to end up to get to the full year guidance. I think you can do that on your own. Do you want to talk about the competitive dynamics, Andre?

Sure. Yeah, thanks for the question, Polo. So I would describe the competitive dynamics as promotional intensity being high, but at the same time, we are seeing a bit of a wearing off effect, meaning liquidity in the marketplace is somewhat reducing. I guess customers are increasingly getting tired of the ongoing price promotions being the only argument being raised. On the back of that, I think our inflow was benefiting from two additional features that we have launched. One was the flex upgrade program on hardware, which is a very strong driver of our inflow at this moment. So that's perceived as a differentiating factor. And second to that, we have also announced that we are increasing our HFC speeds for 70 percent of the population in Switzerland to two and a half gig. That's another differentiating factor. Very relevant one, we believe, because A, of course, there's only 40 percent of the country today covered with fiber and all additional HFC coverage is having a unique situation. Not only delivering one gig, but now two and a half gig, which we think is also strengthening our position with customers when fiber rollout will increasingly get to areas where we have had been a unique selling proposition with HFC so far. So I think that's positive. Additionally, I think worthwhile mentioning, while we have seen good dynamics on our own inflow, you've seen the 33,000 and 5,000 on mobile and broadband respectively on broadband. Now the third quarter consecutively where we have been in the positives. That is not only on the back of strong inflow, but furthermore, we have a reduced churn, which is on the back again of increased retention activities, increased and improved service capabilities and our ability to differentiate through the product additions that I mentioned. So I think overall it remains an intense market, but we see some wearing of promotional attractivity, I would say, to consumers. And on the back of that, we just recently also have seen that the amount of discounts being granted has been slightly reduced. So I think that's a positive indication going forward and will continue to drive the trend.

As with other markets, having this dual brand strategy is making a world of difference because you can compete with Salt

on one

hand and Swisscom on the other hand with products that match their offers and the customers they're targeting.

Next question. Go ahead, Paulo. Just on the dual brand strategy, you don't have one in terms of the UK because you have a premium Virgin Meteo II brand, so that's a different set up from other markets, no?

No, we have GifGaff. GifGaff is our, well, flanker brand, if you will, in the UK and arguably one of the stronger elements of growth. No, GifGaff is a really digital first, incredibly popular mobile brand, which at some point could be a broader telco brand, but that's our brand in the UK, GifGaff. Do you want to say any more about that, Lutz? Yeah,

okay.

Thank

you. Thank you. The next question is from the line of David Wright with Bank of America. Your line is now open.

Yes, hello, guys, and thank you for taking questions once again. I guess, Mike, Lutz, just more of a question on UK potential consolidation. I'm just wondering whether this dynamic of the alt-net may be focusing the financial resources more on loading the network and provisioning rather than building. Does that create any potential sort of hurdles to consolidation, the fact that you might, you know, any of these businesses might have, you know, incumbent subscribers, maybe on discounted pricing? Could that create any more regulatory challenges? And I guess, you know, there's an obvious kind of talk talkers, I think, even themselves have made it quite clear there's an element of distress around their business at the moment. Do you think, given the kind of going concern risk, that the UK regulator could even consider customers from talk talk possibly even being acquired by the two biggest network operators, yourselves and BT? Thank you.

Well, I'm not going to speak about talk talk. You know, you can read about their situation and it's premature to determine or even guess to what the regulator may or may not do and what they may or may not do. We're not assuming talk talk is doing anything but competing with us until they're not. So not much to add to that. On the alt net question, I mean, you are seeing what you described, which is a slowdown in build as financing and capital slowly dries up. And I think that will continue. There will be winners and losers in that game. Some will continue to raise capital, others will consolidate and others will stop building. And so inevitably, you know, one way to improve their prospects is to start selling more directly and perhaps more competitively. It's still very early days. You know, it's too soon to tell whether this will have an impact on the broader market, whether it will have an impact on their, you know, their futures and or our ability to consolidate or not in this market. But I think the trend is the same. And I'll let Boots if he wants to or Andrea if he wants to speak to it. You know, the trend is the same. There are companies like Next Fiber, which is fully financed at four and a half billion pounds that we own a piece of that is going to be building full stop and is going to generate, you know, get to five to seven million homes. No question about it. There's BMO 2, which is going to already at 16 and three and a half, four million of which are fiber and is going to get to full fiber full stop. So there's going to be platforms like ours with 21 to 24 million homes. And that's a certainty. And BT is a certainty. And the rest, you know, we'll see how it shakes out. I think it's the writings on the wall, so to speak. But that doesn't mean between here and there. It's a straight line. There will be what's in place. We look at M&A prospects along three or four levels. First of all, what's the overbilled with us? If we can upgrade it 100 pounds, you know, what's it worth to us to acquire an existing fiber home that somebody spent 500 pounds to build? Secondly, you know, the quality of that network, obviously, what it would cost us to get to our sort of level of sophistication. And thirdly, is there a customer base? Your main question is, does the existence of a customer base on an altnet change that dynamic materially? And I would say no. If there are customers and we would look to see how those could be integrated or acquired or migrated. That in and of itself doesn't change the principle analysis. It's more about where they've built, how much they've spent to build and, you know, and how it fits with our broader strategy. I'll maybe pass on to Andrea. Anything to add to that, Andrea, as the chairman of NextLiber?

No,

I think

you summed it up. Yeah, thank you, Mike. I think you summed it up. You summed it up well, Mike. I would, you know, I would simply say that, you know, there's also a certain amount of value expectations, I think, that need to get reset in the market before we can start to see material consolidation. So I think that's one of the other the other issues that people are struggling with at the moment.

You just put the infrastructure multiple out there, haven't you guys, in one of your early slides? I think you've given the market its price point.

Well, I would say those are pure netcos with scale and cash flow. So it's a little different. You have to penetrate them. Yeah, and existing customers. But fair point.

Yeah, there you go. It was a little tongue in cheek, but I appreciate the answer. Thank you, guys.

Yeah.

Okay. Thank you,

Dave. Thank you. The next question is from the line of Joshua Mills with BMP Paribas. Your line is now open.

Hi, guys. Thanks for taking the question. It comes back a bit to the cable versus fiber debate. My question is, can you talk a bit about how you're testing DOCSIS 4.0? And then going back to Andre's comment earlier about the improvement in speeding the Swiss cable network, can you maybe give any stats about the kind of commercial benefits you're seeing where you do upgrade cable to faster speeds and maybe give us a sense of how much the network longer term will go to that? I mean, if I could tack on one small question. One of the points of the proxies still today is they're now going to be wholesaling from you on cable in 700,000 homes. I think in the past when you've talked about your cable versus fiber strategy, one of the points about the UK was a benefit of upgrading to fiber gives us that opportunity to wholesale. Now you're doing that just on the cable network, so you don't need to make that investment. Do you think this could be a template for other markets in the future as well? And how should we think about that? Thank you.

Yeah, that's a good question. And Josh, I'm not sure we have enough time to answer it, but I'll take a quick crack at it and maybe Henrique can chime in here too. First of all, we have been wholesaling cable or hybrid fiber coax in Belgium, John, I don't know, five years, something like that. We were regulated in Belgium and obligated to open up the cable network in Flanders. And we did and Orange Belgium is a very happy customer on our cable network and has hundreds of thousands of customers and has already committed exclusively to our fiber build as we do that through wire. So there are situations where, whether it's HFC or fiber, wholesalers are happy. As long as they're getting the speeds they want, the service, the quality, it works fine. And we haven't done it anywhere else. We haven't been obligated to do it anywhere else. Doesn't mean we couldn't do it elsewhere. But I think when you step back and ask the question, why wouldn't we do it in, say, the UK, principally, it's because the cost to upgrade the fiber and the cost to upgrade the DOCSIS 4 in the UK is about the same within, you know, spitting distance, so to speak. And when you have the choice of upgrading the DOCSIS 4 or fiber in a market like the UK where you own your own ducts, it's pretty clear that fiber makes more sense for the long term, you know, when you might need to look at DOCSIS 5, DOCSIS 6, but more importantly, when the entire wholesale market is working off of a fiber platform, beginning, of course, with Open Reach and even Alt Nets, then to be competitive, to be in that marketplace, you're going to need to go fiber. So there's a market check, you know, what's needed at the commercial level, what's the rest of the sector doing in that market around access, what kind of technology, so that's driving the decision in that market. And in Belgium, you know, we are happy as HFC wholesalers and we'll continue to do that for some time. But slowly and over time, we'll migrate that network to fiber, as we discussed and clarified today with that MOU. And in Switzerland, we're taking an even different approach, which is let's use the best technology for the particular customer in the particular region. So in that market, we have a complete option, you know, a menu. We can access our 2.5 gig HFC platform. We can access the Swiss, Swisscom's fiber platform. We can build fiber. We really have the best of all options there. Clearly, we'll migrate as many customers as we can to our own infrastructure because that

benefits margins,

but we really have the flexibility to be competitive from a retail point of view with whatever technology makes the most sense. So there's not one size that fits all in this equation, but it typically revolves around the cost to upgrade, but the market realities of the competitive environment, the wholesale environment, the revenue opportunity in wholesale, and, you know, whether or not regulators are requiring us to do one thing or another, as they did in Belgium, for example. So I think we're taking the right approach. If you dig into each and every one of them, you'd see that they are the correct way to attack the economics, the technology, the customer opportunity, the competitive environment. And it's great to have that ability to be flexible. So I hope that's addressing your question. But if there's anything further, maybe follow up and let's see, make sure we've done it.

Yeah, that's very clear. And I'm guessing the any detail on how fast the broadband speeds on the cable network in Switzerland compared to the old cable network might wait for the CMD now.

Okay. Yeah, they'll dig into that for sure. Operator.

Thank you. The next question is from the line of Luigi with HSBC. Your line is now open.

Yes. Hello, everybody. Thanks for taking my questions. It's about the Netherlands and your pricing strategy. You know, if I think about your broadband price increase last year, I think you just did exactly what KPN did back in July 2023. Now, this year, KPN is going for 3.8 percent growth and Vodafone Zico is going for 2.5 percent. And I was wondering what is the rationale behind this and how you see competitive dynamics in that market. Thank you.

Yeah, we've got Richie on who's our interim CEO. I think it's as much as anything to do with the fact that we're trying to remain competitive in a declining inflation market, which doesn't call for the same sort of increases. But, Richie, do you want to provide more color on our price increase level?

Yeah, yeah, for sure. Thanks, Mike. The two things. First and foremost, we do a price increase both on the back book and front book. It's not similar to the others in the Dutch market. But also keep in mind that the inflation in the Netherlands is falling. Last year, we had about 10 percent inflation and we did an eight and a half percent fixed price increase. This year, the inflation is 3.8 and we're doing a two and a half percent. The price increase in itself is, I would say, not a reflection of the competitive position in the market, but it's all about price value perception. We do see that customers who decide to leave us use cost of subscription as a main reason for them to turn. And hence our decision to go slightly below the inflation level to make sure that the price sort of value perception stays in balance with market expectations.

Last year, as you recall, KPN took a price increase on their back book and lowered their front book. So some of this is signaling too, perhaps. We've always taken price increases on both front book and back book. So hopefully there's a more rational market here.

Thank you. Thank you. The next question is from the line of James Retser with New Street Research. Your line is now open.

Yes, thank you very much indeed for taking the question. So I wondered if possible, just go back to talk about TalkTalk in a little bit more detail. I know you might be limited in what you can say, but are there any scenarios you can see in which you might be interested in acquiring some of the assets or the rate at which the customer base is declining at the moment just makes it kind of too risky to get involved, like the asset you think you see now is very fun when it comes to closing. Being able to add on that particularly would be really interesting.

James, I want to make sure I heard the first part of it. I got the gist of the question around M&A, but which entity are you referring to? TalkTalk in particular in

the UK. Yeah, okay, I didn't hear that part. So does the interest get your thoughts on whether it's too risky an asset to be looking at right now given the rate customers are coming down?

Yeah, I get you now. I just didn't hear that first part. You're coming in and out a little bit. I don't think we have anything to say about TalkTalk today. I mean, we watch as others do with great interest what's happening across the sector in the UK, but obviously with TalkTalk, they're a competitor and we certainly are watching what they're doing or what they're considering doing with their B2B, with their network, with their consumer business. It's really outside of our control. If there were opportunities, you should assume we would be looking at them, but there's nothing I can say about that today.

Okay, so we should try and lease off, but thank you. Yep.

Thank you. The next question is from the line of Matthew Harrigan with the Benchmark Company. Your line is now open.

Thank you. I think I'm the last American lesson to draw these days. So a conceptual question really. At some various other industry organizations, I think even some consultancies like McKinsey really commented on how you've had trillions of dollars of equity value created, Silicon Valley and other places off telecom networks. And you've really obviously borne the cost without necessarily having that much impact. Is there anything that's different about the service code that would enable you to participate better in fintech, entertainment, healthcare, etc.? Is that like at least a complementary rationale for doing this relatively complicated structure?

Well, possibly, Matt. I mean, I think both entities, a Netco and a Servco, are probably better positioned to compete long term and take their fair share of that ecosystem. I mean, you correctly point out that net neutrality as a whole created haves and have nots, right? And the haves are anybody in the big tech space selling apps and access largely for free. And we in the infrastructure connectivity space have obviously experienced more competition, higher capex and higher usage and capacity requirements. So with some ability to pass that along to consumers, but not as much as we'd like. So going forward, there's a handful of things the industry is doing. Network as a service. I'm sure you're following that. New products and services in the home and how we might take advantage of that. AI, which is going to give us a much stronger, some more sophisticated way to manage customers and our networks. But the Netco Servco model itself certainly should create a more agile Servco management team and product and brand, looking at accessing the Netco as well as perhaps other networks to try to drive services into the home and into businesses. And the Netco itself will become really a connectivity provider first, but also depending on who the user is, a more sophisticated transport hub. So I don't think it by definition makes it easier to ensure that the next 10 years don't look like the last 10 years. But I think it certainly bends that way. And I think in some instances, depending on how well we execute and kind of structure we put in place and the capital we have, I think it could actually achieve that. But we've got things to do across the board, even in our integrated businesses, to make sure that the next 10 years look different than the last 10 years. And I think the toolbox, as I said at the outset, is pretty good

to

make that happen.

Thanks,

Mike.

You

got it.

Thank you. There are no further questions at this time. So I will hand the call back to Mike Freese.

Great. Thanks, everybody, for joining. I hope you have an incredible summer wherever you are, whatever you're doing. And do please put in your calendar September 9th in Zurich or September 9th wherever you'll be. Be connected, of course, to our capital markets today for sunrise. We really look forward to getting that process moving in earnest in the fall. So thanks, and we'll speak to you soon. Take care.

Ladies and gentlemen, this concludes Liberty Global's second quarter 2024 investor call. As a reminder, a replay of the call will be available in the investor relations section of Liberty Global's website. There you can also find a copy of today's presentation materials.