Liberty Global Ltd.

Good morning, ladies and gentlemen, and thank you for saying goodbye. Welcome to Liberty Global's first quarter 2025 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 in 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 Freese.

Great. And welcome, everyone. Thanks for joining our first quarter investor call. We've got a lot of ground to cover, so we'll jump right into prepared remarks. Of course, after that, we look forward to your questions, where I'll get members of our management team engaged as needed. Just a reminder that we'll be working off of slides today, which those of you on the webcast should be able to see now, at least we hope so. If not, they're always available on our website. So I'll kick off on slide three with a few broad observations. As you'll remember, 15 months ago on this call, we outlined a strategic plan that was focused on creating value And just as importantly, finding ways to deliver that value to our shareholders. The tax-free spinoff of Sunrise this past November, which continues to trade well in the Swiss market, was the first big dividend from that plan. But not our only achievement. Just a few months ago on our year-end call, we reviewed progress across the balance of those strategic initiatives and presented the tactical steps we're taking now to create value on our three core platforms, Liberty Telecom, Liberty Growth, and Liberty Services. Now, the first takeaway from this call is that the team and I remain fully committed to those goals, and we're making solid progress across the board. That includes driving commercial momentum and network upgrades in our increasingly competitive telecom markets, optimizing our corporate structure and services platforms, and with $2.1 billion of cash on hand and a further $500 to $750 million of asset sales planned this year, continuing to be smart about capital allocation. So let's go through it one by one, beginning with Liberty Telecom on slide four, where the value creation opportunity is substantial and the strategy is clear. Wherever and whenever possible, we intend to pursue transactions or opportunities that crystallize and deliver value to shareholders in the medium term. Remember, Sunrise as part of Liberty Global was valued at around 5.5 times EBITDA. As a standalone Swiss company, it's now trading at over eight times EBITDA or the equivalent of of $11 per Liberty share, so basically equal to our current market cap. And Sunrise is only 10% of our aggregate EBITDA. Now, we're not saying we can do that in every case, but there are multiple opportunities for value creation at the level of our operating companies, which still comprise four markets, 80 million connections, 22 billion of aggregate revenue, and 8 billion of aggregate EBITDA. So we have a lot to work with, and we're focused on three near-term tactical goals for Liberty Telecom. The first is the finance and monetize network infrastructure where we can do that. And as we've discussed, the rationale for this varies by market. But we know fixed infrastructure in Europe is a highly sought after and valuable asset class. So where possible, we're seeking to raise capital at higher multiples, accelerate or strengthen network upgrades and rollouts, and create strategic platforms for market rationalization. That's exactly what we believe we're achieving in Belgium. The creation of our netco, which we call Wire, has allowed us to develop an exclusive wholesale relationship with Orange. It's allowed us to secure attractive CapEx financing for our fiber upgrade. And it's allowed us to enter into strategic discussions with the incumbent proxies around network sharing, which are progressing quite well, actually. And then ultimately, it's going to allow us to facilitate bringing equity partners into the platform on highly accretive terms. In Ireland, our fiber upgrade will reach 80% of our footprint by the end of this year, and it's already improved our competitiveness. It's allowed us to enter into wholesale arrangements with both Sky and Vodafone, generating new revenue streams, and it's reshaped the market in our favor. In the UK, we are confirming today that we have paused our NETCO plans at the VMO2 level in order to align with Telefonica's announced strategic review. At the same time, Nextfiber has updated its plans and will now target 2.5 million fiber homes by year end on a cumulative basis. Let me say first that we pride ourselves on being good partners and we appreciate and understand Telefonica's position. Undoubtedly, we have more to say about all of this as the year unfolds. In the meantime, there are multiple ways to continue to strengthen VMO2's competitive position in the UK. Our services already reach 7 million fiber homes. And for reference, VMO2 achieved record sales and net ads last month on the next fiber footprint. So stay tuned here. In the Netherlands, Steven van Rooyen has made significant progress on a new strategic plan. You'll hear about that just in a moment. One element of that plan is a double down on DOCSIS IV and the evolution of our broadband network, which resolves the outstanding question on some of your minds as to whether we need to build fiber in the Netherlands, and the answer is no. The second tactical goal on this slide is to organize our strategic and operating plans in a way that delivers long-term free cash flow growth and allows us to begin the leveraging over time. The sunrise spin reaffirmed the fact that stable free cash flow and more modest leverage are catalysts for value creation. Now, Charlie will have more to say about this in a moment, but we are constantly focused on the balance sheet of our operating companies. Having refinanced all 2027 maturities in the last 12 months, And we just in this past quarter extended a further 500 million euros of Telenet's debt at rates in line with historical spreads. Now, we're sensitive to the fact that our leverage in some cases is above our targets. That is why we've announced, for example, the sale of our Dutch towers. And then we intend to use those proceeds to pay down debt. Finally, and perhaps most importantly, it's imperative that we continue to drive commercial momentum across our businesses. Every market is different, of course. but competitive intensity is increasing wherever we operate. This is the nature of our sector today. In addition to stabilizing our network strategies, we're finding across the footprint that three core things are working well. Wherever we operate, we are supporting customer acquisition with flanker brands that target different segments of the market. GIFGAF is a strong complement to the O2 brand in the UK, and we've just launched a broadband proposition to this growing customer segment. Illinois and the Netherlands was just awarded the best mobile provider. And base in Belgium allows us to compete at the lower end of the market, as well as expand into the south, where we see great opportunity for mobile and broadband growth. In every market, we are hyper-focused on base management and retention. This includes things like strengthening the value of our loyalty programs to drive stickiness and support cross-sell and up-sell. In markets like the UK, we're growing ARPU with AI tools that dynamically and proactively address customer contracts insurance. And we're hardening our base with things like a 25% speed increase in Holland and Check and Smile service programs in Belgium. And then lastly, we're sharpening our competitive positioning with new packaging and pricing. VMO2 just refreshed its mobile portfolio with better airtime rates and multi-SIM offerings. And as we'll discuss in a moment, Vodafone Ziggo has just lowered its front book to match KPN. Now, many of these steps are laying the groundwork for greater reach, stronger sales, better retention, more ARPU, and higher quality of service, primarily over the medium term. And while we do see green shoots in many markets today, competition for broadband and mobile customers remains intense. Generally, our Q1 subscriber and operating results on slide five reflect that. We saw stable broadband losses with a downtick in the UK. and we experienced weakness in post-paid mobile across all of our markets, with the exception of Holland. These headwinds were offset by strong, fixed ARPU growth nearly everywhere, reflecting price increases and the impact of the commercial initiatives I just referenced. Turning to each market briefly, in the UK, broadband net edge declined, did a higher churn and higher overall market flux. That was driven in part by one-touch switch, the new policy and aggressive alt net offers. Lutz and the team are adapting the approach they're using to retention, while continue to focus on value with another quarter, as I said, of solid fixed ARPU growth. And with over 2 million greenfield homes, there's significant growth opportunity remaining in the next fiber footprint. Overall, the UK post-pay market remained relatively soft, with the M02 impacted by B2B contract port outs, which are typically lower value, of course. Consumer net ads, on the other hand, improved year on year. And encouragingly, we saw stable O2 churn dynamics and we continue to see gift gap growth despite a competitive overall market with lots of MVNO activity. It's worth noting that mobile service revenue, as reported by Virgin Media O2, was up in the quarter year-over-year. It was supported in part by a 2.6% uptick in mobile postpaid ARPU. Now, turning to Vodafone Zigo, we continue to see an intensely competitive environment driven by promo offers from pretty much all the providers. We'll discuss in more detail in the next slide what we intend to do, but in response to this, Vodafone Ziggo launched new front book offers with simplified tiers and between a three to five euro price reduction. And that helps them better align to KPM pricing. And we've already seen some benefits to churn as customers migrate. Postpaid mobile net ads in Holland were 29,000. That was driven by growth in B2B. And while the mobile market is generally more rational than fixed, we still see lots of price competition in the no-freel segment. In Belgium, we had a steady quarter compared to prior periods. where we continue to see traction with our base flanker brand in the south. On the Telnet brand, we saw a successful Wi-Fi campaign during the quarter. We announced a price adjustment of around 3%, which took effect from April. The Belgian mobile market remains highly competitive, and that's characterized by prolonged promotional activity and repriced offers from the main flanker brands. In response to this, we've successfully repositioned base as a counter to the launch of Digi, and that's driven improved performance in our flanker brand. And then finally, the Irish broadband market is heating up around fiber, but we've seen churn improve as Virgin Media Ireland optimizes the customer retention process. During the quarter, we've also seen our wholesale growth through Sky and Vodafone starting to offset retail losses. Now, I'd like to spend a few moments on Vodafone Ziggo. As you know, Stephen has been leading the charge for about six months. One of the main reasons that we and Vodafone hired Stephen was that we felt he could give us a clear-eyed assessment of the market, help us figure out Vodafone Ziggo's true strengths and weaknesses, and then develop a plan to win again. And that's exactly what he's done. On slide six, you'll see a very brief summary of the four key drivers he and the management team will use to regain commercial momentum in what is essentially a healthy three-player market. That's beginning with how they work. Specifically, that means simplifying processes, accelerating decision-making, and optimizing costs and efficiencies. This was long overdue and will also generate significant OPEC savings. Second, I think he has correctly concluded that the Dutch market is driven by speed and price, not necessarily technology. We have the highest ARPUs in the market, so this is the right time to reposition pricing, which you've already started doing on the front book, as I just mentioned. And then third, as I mentioned a moment ago, Dutch consumers value speed, price, and quality of service. And on the fixed network, we're going to go all in on DOCSIS 4, which will take us to 8 gig speeds by the end of 2026 at a fraction of the cost to build fiber in this market. In the meantime, our current network configuration can get us to 2 gigs, which will accelerate. And then finally, the team will reinvest in Vodafone Ziggo's core strengths. And that includes strong brands, popular loyalty programs. and a large FMC base, as well as unique sports platform. Charlie will walk through some of the financial implications of this plan, but Margarita and I are 100% supportive of Steven and the team. It's time to reset in order to get back to growth. Now turning to slide seven, over the last year or so, we've provided greater disclosure on our Liberty Growth portfolio. I think that's helped investors and analysts understand the nature and quality of our investments in tech, media and content, and infrastructure. This is especially important given the size of our portfolio at $3.3 billion and its relative contribution to our share price today, roughly $10 per share on an $11 stock. The strategy with Liberty Growth is simple. We want to be in a position to rotate capital out of non-core and subscale assets and into higher return businesses or strategic Liberty Telecom opportunities. Tactically, we have committed to sell between $500 million to $750 million of assets this year. We have line of sight on certain deals, and I'd remind you that our publicly listed stakes alone total $550 million. Now, it's premature to disclose any potential investments into Liberty Telecom with those proceeds, but we have been quite busy at the Liberty growth level. As a reminder, our portfolio is highly concentrated, with seven investments accounting for nearly 75%. of the $3.3 billion fair market value today. Now, you can see those $2.5 billion of investments listed on the bottom left of slide eight, along with the sequential change in fair market value this quarter. Now, the changes quarter over quarter relate to increased investment, favorable FX movements, and increases in valuations, and they total about $200 million for the entire portfolio just in the last three months. Now, given our controlling interest in Formula E, we do now consolidate this investment and we're excited about showing more regular updates. It's been a fantastic start to Season 11 with record viewership, particularly in the U.S., where our Mexico City race, for example, drew an audience 80% higher than F1's Las Vegas Grand Prix. Now, we're headed to Monaco this weekend, and I'm telling you, it's sold out for the doubleheader on Saturday and Sunday. And interestingly, to tap into this growing popularity, we launched a pretty interesting and unique sort of first in motorsports program where we brought 11 well-known personalities from sport, technology, and entertainment and gave them the unprecedented chance to prepare like a Formula E racer and actually drive the Gen 3 Evo car during a two-day track event at the Miami Circuit. Now, you'll see that content, which has already generated 300 million views across social media and in a feature-length documentary later this year. Also, last week, we launched a brand-new Formula E documentary on Amazon Prime, which goes behind the scenes, with four drivers over the 2024 season. I encourage you to check it out just to get a feel for the racing and the personalities in the championship. And then finally, we're a short 18 months away from the new Gen 4 car, which is now testing and delivering incredible power, speed, and performance. So exciting things happening there. One more slide for me on Liberty Services and our evolving corporate structure. As a reminder, Liberty Tech and Liberty Bloom generate $600 million of annual revenue and positive operating free cash flow. Far from being a burden, each of these platforms continues to pursue growth and efficiency initiatives that will create real equity value for shareholders. Liberty Broom, as you remember, provides a host of financial and back office services. It just went public with its first marketing campaign and has already added, according to Charlie, 10 new non-Liberty clients to their roster. The balance of our corporate costs amount to about $200 million annually after management fees, and this is the number that analysts are valuing at approximately 14 times, resulting in a $10 reduction in our sum of the parts. Not only does the reduction in value not recognize the inherent equity value of Liberty Bloom and Liberty Tech, it penalizes us in relation to other sectors like media and private equity, even compared to some of our telco peers. Now, we'll continue to make the case with analysts, but in the meantime, we are working on reducing these corporate costs through a combination of efficiencies and additional revenue, generated from Liberty Telecom, Liberty Growth, and Liberty Services. So, you know, stay tuned for more details about this in the second half of the year. And then finally, just a reminder that our corporate cash, which totaled 2.1 billion at the end of the quarter, sits 60% in euros and is dedicated to supporting the strategic plans I just outlined. This includes, of course, opportunistic share buybacks, which we have targeted at up to 10% of our shares in 2025. As always, I look forward to digging into greater detail during the Q&A. But with that, Charlie, over to you.

Thanks, Mike. The next slide sets out a summary of the quarterly revenue and EBITDA performance in our key markets. VM02 reported a return to revenue growth of 0.4%, excluding next fiber-related construction revenues and handset revenues in Q1. This was driven by a strong performance in consumer fixed revenues and improving momentum in the mobile service revenue segment. Vodafone Ziggo reported a revenue decline of 2.6%, mainly driven by a decline in fixed revenues and lower handset sales, which was partially offset by continued growth in Zygo Sport and B2B fixed revenues. Telenet reported a revenue increase of 2.7%, supported by higher programming revenues in the quarter and the continued benefit of the June 2024 price adjustment. In terms of Q1 adjusted EBITDA performance, BMO2's adjusted EBITDA grew 0.8%, excluding the impact of Next Fiber, supported by core service revenue growth and cost efficiencies. Vodafone Zigo's adjusted EBITDA declined 8% in the quarter, impacted by the decline in the fixed business, increased UEFA programming costs, and higher labour costs related to the collective labour agreement. And Telenet's adjusted EBITDA grew 0.8%, supported by lower network costs and other cost control measures, which were partially offset by higher programming costs and wage inflation. The next slide provides an update on the key metrics of our capital allocation model. Starting on the top left of the slide, in Q1, we saw cash flow generation in line with our expectations. As has been the case in previous years, Q1 is typically a modest cash outflow quarter, given the timing of interest payments on our debt stack and with limited cash distribution to the JVs, which tends to come in Q4. Turning to our cash walk, our consolidated cash balance sits at $2.1 billion at the end of Q1. From our closing Q4 balance, we saw modest outflows in the quarter related to investments in the Liberty Growth portfolio and the execution of our share buyback program. Moving to Liberty Growth, the fair market value of our Liberty Growth portfolio increased by around $150 million during the quarter. This was primarily driven by the increase in dollar terms of our largely Euro-denominated investments, as well as new investments in Atlas Edge and NextFiber. Finally, looking at our CapEx trends, we continue to invest in our fixed and mobile networks, and the elevated CapEx in Belgium and Ireland reflects the continued commitment to roll out fibre networks in those markets. Now, as a reminder, at Telnet, the step-up in CapEx will support an additional 375,000 homes passed by year-end at 25 at WIRE, and will also support 5G and digital CapEx at the Servco. We expect CapEx Intensity at Servco to decline in 2026 as we compete the major investments in the mobile network in 2025. Wire CapEx will also be fully debt financed through its own CapEx facility, which means there's no equity requirement from either Liberty Global or Tarnet. Overall, we remain confident in our ability to remain in line with our capital intensity targets across the opcos as we set out in the guidance we announced at Q4 results. Turning to our treasury update, We maintain a strong balance sheet position, with our debt split equally between bank debt and bonds. Our variable bank debt is fixed using swaps, which are independent of the debt, allowing us to refinance the credit spreads on our near-term maturities, but also benefit from the full term of the swaps. We maintain a cost of debt of around 4% to 5%, with an average life on our debt of approximately five years. Now, in general, we look to manage our debt maturities so that there are no material refinancing commitments in the next three years. Following the successful refinancing of VMO2, we have now turned out all 2027 maturities, and this means we're able to remain opportunistic and flexible in our financing approach. And we intend to remain proactive in terms of pushing out the existing maturities and extending the average life of our debt. Our activity at Telenet demonstrates our ability to remain agile, with a new eight-year, €500 million term loan facility deployed and an attractive spread of around 300 basis points, which was completed during the quarter. And as a reminder, we also secure commitments for a 500 million euro CapEx facility for wire, beginning as a standalone capital structure to support the fibre rollout. Now, Mike has already discussed the new strategic plan at Betafen Ziggo. But in the following slide, I'm going to walk through both the near-term financial implications of the plan on the 2025 guidance and also give some colour on the mid-term financial implications and actions that we are taking to help return the business to our four to five times long-term leverage target. Now, beginning with the impact on 2025 guidance, we're lowering revenue guidance from broadly stable to low single digit decline for 2025. Now, as Mike laid out in his remarks, this is principally driven by more aggressive retention activity across the market and the flow through of lower front book pricing and the right pricing of the Zygo base. Adjusted EBITDA is now expected to be down mid to high single digits in 2025, impacted by this migration process. Capital intensity will remain at 20% to 22% of sales in line with the guidance given in February. And adjusted free cash flow and shareholder distributions will be lower at a range of 200 to 250 million euros versus the 300 million we previously guided to, reflecting the impact of this lower adjusted WDA guidance. Now, turning to the midterm, we expect that the flow through from the front book pricing will continue to impact revenue and adjusted WDA trends through to 2026. but with a moderating impact versus that in 2025. We believe that the series of commercial and network actions that we are taking will stabilize and then reduce the declines that we've been seeing in fixed subscriber customers. And as Mike discussed, we're accelerating our DOCSIS 4 strategy in the Netherlands, not only to 8 gig speeds from 2026, but also strong interim steps, including 4 gig. We aim to do this largely within the historic CapEx envelope of Budapest and Zygo of around 900 million a year. Now, whilst there'll be an impact of the new strategic plan in 2025 and 2026, we're aiming to position the business to deliver a return to growth in the midterm, probably around 2027, whilst maintaining a broadly stable free cash flow profile through this transition period. Now, lastly, on leverage, given the short-term pressure on adjusted EBITDA, we anticipate leverage will peak in 2026 and reduce thereafter. And given this increase in short-term leverage, we're accelerating non-core asset sales, starting with Vodafone Zigo's tower assets, and we will use the proceeds from these sales towards paying down debt. Turning to our guidance for all our assets, I mean, just talk through the updates of Vodafone Zigo. We are reconfirming all the remaining guidance metrics of BMO2, Telenet, Liberty Services, and Corporate. And that concludes our prepared remarks for Q1, and I would like to hand over to the operator for Q&A.