Liberty Global Ltd.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global's second quarter 2025 investor call. This call and the associated webcast are property of Liberty Global and any redistribution, retransmission, or rebroadcast of this call or webcast in any form without 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 respects 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.

Thank you, Operator. Hello, everyone. We appreciate you joining us today for our second quarter results call. I hope your summer is off to a great start, wherever you may be. As you know by now, we try to keep these calls fairly consistent, which means I've got my key leadership team on here with me, and as soon as Charlie and I finish with the prepared remarks, we'll get right to your questions. Now, we do speak from slides, and I'm going to get us started on slide three with some highlights, really I think the key messages from the quarter. And the first point should not be a surprise to anyone on this call. When you cut through it all, this management team, this board, remain 100% focused on creating and delivering value for shareholders. We do that through three core platforms, Liberty Telecom, Liberty Growth, and Liberty Services. Beginning with Liberty Telecom, where our goal is to drive commercial momentum and unlock value for you, as we did with our Swiss subsidiary, Sunrise. I'll come back to how we might do this at the end of my remarks, but let me first make some operational comments. I think the main takeaway here is that our markets remain highly competitive. With new entrants like Altnets in the UK and low-cost providers, typically MVNOs, impacting both gross ads and churn. In the face of these headwinds, our subscriber results are mixed, with some markets seeing improved churn and green shoots, and others facing continued pressure in both sales and net ads. Despite these challenges, we're performing regionally well financially, delivering revenue and EBITDA in line with guidance expectations, and that's helped in part by price increases and strong ARPU results. Not surprisingly, every market is employing similar strategies to drive commercial momentum using fixed mobile convergence or FMC and flanker brands to support mobile sales, AI-based retention and marketing tools to improve churn, and speed upgrades and loyalty programs to bolster NPS and harden the base. We're also committed to having the highest quality networks everywhere we operate. To that end, our fiber and 5G upgrade plans are on track. We've acquired Spectrum in the UK, which will be very beneficial, and we recently expanded our footprint in the Netherlands. We're also focused on monetizing these networks where and when we can. And we have both tower and fiber transactions planned for the second half of the year to support growth and deleveraging. I'll talk about those. Now, moving to Liberty Growth, our strategy here also remains the same. Today, our portfolio is worth $3.4 billion, representing a small increase from Q1, primarily driven by additional investments and favorable FX movements. And this is a highly concentrated group of assets. I know we keep telling you that. I think it's important to remind folks. The top six investments comprise over 80% of the value here. Three investments in media, two in infrastructure, and that's along with our tech portfolio. The goal moving forward is simple. We want to rotate capital into higher return investments. and sectors that have tailwinds and, where appropriate, use some of that capital for accretive transactions at Liberty Telecom like we did with Sunrise. Now, our guidance for the year is to sell assets totaling $500 to $750 million. We believe this is achievable, but, of course, we won't sacrifice price just to get to an end date. In other words, if it takes us into Q1, for example, that should be fine. Along those lines, we've exited our position in Vodafone, which netted around 10% to 15% of the goal. Happy to take questions about that. Now, jumping into a couple of updates, I could not be more excited about Formula E's progress this season. Our London race last weekend capped off an extraordinary year. And you may have seen that we just announced an extension to our exclusive license with the FIA covering all-electric single-seater racing through 2053. 30 years is a lifetime in this sport, especially with the step changes we're seeing every two years in the speed and performance of these cars, as well as the growth in fans around the world, which now total 400 million. Finishing up on Liberty Growth, our commitment to digital infrastructure continues to expand, both through investments in businesses like Atlas Edge, and the value attributable to existing assets like Edge Connects, a data center platform and one of our largest and most successful investments to date. And I'll finish up on this slide with a few comments on our service platforms and corporate operating model. Trust me, when analysts deduct $8 to $10 per share off your stock price for this stuff, it's worth a minute or two. I'll start with Liberty Bloom, which delivers a multitude of business solutions for 36 enterprise customers, over a third of which are external to the Liberty family. This new division is on track to exceed $100 million of revenue and generate positive EBITDA this year. I'm excited about the organic and inorganic growth plans at Bloom, which is a great example of how we're taking corporate capabilities and turning them into valuable enterprises. I can tell you Charlie's goal is to build a billion-dollar company here, to which I say, go get it. Similarly, our Liberty Tech platform generates $475 million in revenue and has been driving ever-increasing profitability over the last few years with sophisticated outsourcing arrangements. I think we've been updating you on these, but you may or may not have paid attention. These arrangements keep our team in control of IP and product development, but they reduce our cost to serve. And there could be more of these types of deals down the road. Perhaps most importantly, we've been acutely focused on our own net corporate costs. Our guidance for the year was to spend a bit less than $200 million when you'd add it all together, and we are today improving that guidance by at least $25 million as we begin to reshape our operating model. Now, this is really a good news story, and you should stay tuned for more information throughout the rest of the year. We're confident we can continue to optimize this number through both revenue generation and strategic reshaping. Finally, at the end of the quarter, our cash balance was $1.9 billion. We bought back about 3% of our shares, and Depending on asset sales, we expect that cash figure to be higher at the end of the year. So with that as background, I'm going to spend a few minutes double-clicking on our telecom business before handing it over to Charlie for the numbers. Now, I'm on slide four, which presents some key headlines for each operation, starting with Virgin Media 02. where we're really excited to be nearing the completion of our merger with Daisy, which will create a B2B powerhouse in the UK and the second largest solutions provider to small and medium enterprises, with £1.4 billion of revenue and even to have £150 million. As with most of our deals, synergies are substantial, with an NPV of £600 million, including integration costs, and that's based on an annual... Run rate savings estimate of around 70 million pounds by 2030. So this is a great deal. On the mobile front, VMO2 recently closed on the purchase of 80 MHz of Spectrum from Vodafone 3. That was following the completion of their merger and part of that deal. And this brings our share of Spectrum in the market to 30%, which is really significant. It secures our competitive position in the mobile market for a very long time. And then finally, Lutz and the team are hard at work driving commercial momentum. including a customer service transformation plan that has more than halved Virgin Media complaints year over year. That's an incredible achievement. Also, he's been working on product enhancements like data rollover on O2 premium plans and multi-SIM capabilities for the Volt proposition. There's a lot of work going on here. I'm sure there'll be plenty of questions on the UK. So let me move to Vodafone's Ziggo, where, as I mentioned, we're starting to see some green shoots as a result of management's strategic pivot in the markets. We'll come back to this on the next slide. On the M&A front, the sale of our Dutch towers is progressing well, and we anticipate completion in the second half, with proceeds likely to be used to leverage the business. And then finally, we announced a great deal with Delta in the market. That gives us access to another 600,000 homes, Greenfield homes, really, off-net in the South. That makes us a true nationwide operator. In Belgium, we continue to make good progress with Proximus on a fixed network sharing deal. I'll touch on this in a moment. But it's really shaping up to be a great example of regulators seeing the bigger picture on the need for infrastructure investment. Two more quick headlines here. In the south of Belgium, our launch of BASE over a year ago continues to perform well and unlock 2 million greenfield homes in that part of the country. And after a material investment in 5G over the last three years, I'm sure you've been following that, it was great to see Telenet recognized by the government as providing the best 5G coverage in Belgium, both indoor and outdoor. So well done, John and the team. And then in Ireland, we're racing towards completion of our full fiber rollout with 80% coverage expected by year end with the balance built in the first half of next year. Both with DOCSIS and with fiber, we are the speed leader throughout the country. We recently launched Ireland's first 5 gigabit fiber broadband service. And importantly, we also just added our third wholesale fiber customer in this market. So after Sky and Vodafone, that helps to bring our utilization on the Fiverr network to 16%, which is great, as we've just gotten started. And then finally, we're picking up momentum in mobile in Ireland with the launch of our 15 for Life offer in May, an opportunity for us to be disruptive. Now, okay, just three more slides before I hand it to Charlie. I want to be sure that we provide a bit more detail on two significant strategic developments in the Benelux region. Beginning in the Netherlands, where our last call, I think we outlined Stephen and the management team's new strategic and operating plan for the Dutch market. The plans organized here on slide five into four core initiatives. And I'll touch on each briefly. Suffice it to say, things are coming together well. beginning with the recent implementation of a more agile operating model, and that's been characterized by exactly what you'd think you'd see. Simplified processes, accelerated decision-making, optimized costs, and all that will result in significant OpEx savings, but more importantly, a more competitive posture vis-a-vis KPN. Mostly, Stephen has instilled a culture of winning and pride across the organization. That's exactly what we needed here. I love that. Second major initiative revolves around repositioning broadband pricing, which happened in April, and after one month, really a one-month lag, May and June saw a 50% improvement in churn intent compared to April. That's supported by moving to a 24-month contract, but so far so good. Those are green shoots. Above all else, it was particularly important to finalize a clear network strategy in this market. Analysts have penalized us forever based on what I think is a false belief that we need to build fiber here. Let me be clear. In the HFC network in Holland... is incredibly robust today and capable of lightening fast broadband speeds tomorrow. So perhaps to put a pin in it, we will maximize the one gig speeds we have today across the HFC footprint. We will aggressively roll out two gig speeds using the current DOCSIS 3.1 technology, and we will accelerate our upgrade of DOCSIS 4 with eight gig speeds expected in 2026. It might also be worth reminding everyone that the cost of doctors for in the Netherlands including the 1.8 gig network upgrade is ninety percent cheaper than building fiber ninety percent so pretty clear decision there and lastly the team is reinvesting in Vodafone Ziggo's core strengths in particular our brands our loyalty programs our FMC propositions this is come to life with things like a new Wi-Fi guarantee the relaunch of the Vodafone brand and a renewed investment in our Flanker brand so hopefully That gives you a slightly deeper understanding of the organic plans the team are busy rolling out, all of which have given us more optimism about 2026 and beyond in Holland. And next, just a quick update on Belgium, and in particular our discussions with Proximus to rationalize fixed networks. As a reminder, Proximus and FiberClar on one side and Telenet and our netco called Wire on the other side have made significant progress on an agreement to collaborate with on the acceleration of fiber across Flanders. I know this has taken quite a while, but the teams have been working very closely with local regulators, the BCA and BIPT, really from the beginning, and we expect that they will launch a market test of our arrangement in September, which is really good news. In fairness, this is a complicated deal, so the right-hand side of this slide attempts to clarify for everyone what's going on here. To simplify, there are 4.1 million homes in Flanders and Brussels, About 1.4 million of those homes, or roughly 35%, are in areas that we would consider dense and urban. And in those territories, they're denoted in gray on the pie chart, both Proximus and Wire will continue to build fiber on their own and compete, as we currently do. But in the balance of the market, represented here in different shades of green, we will collaborate, really for the benefit of consumers in the end. In the medium-dense territories, representing 2 million homes, or the lighter green on this chart, Wire and Proximus will split the market up with Wire building 60% or 1.2 million of those homes and Proximus building the remaining 40% or 800,000 fiber homes. But regardless of who builds where and regardless of which territories, all parties will use the same network for distribution of their services, which means that Wire, for example, in those light green areas, will have 85% utilization of its fiber network and 100% market share of the wholesale business, again, on those 1.2 million fiber homes. In addition, and this was a bonus, in the 700,000 homes that are considered rural, Proximus will use and migrate their customers to our existing HFC network. So we're really excited about this transaction, which improves on what is already a great story in Belgium. By the way, there's some additional value creation steps for us to take here, including creating unique capital structures for Wire and Telenet, bringing new equity investors into wire, and driving free cash flow. I'm telling that at the Servco from 2026 as CapEx starts to decline. So a lot of positive things in Belgium. Let me move to my last slide then. It's number seven, I believe, which is really the main message I want to leave you with today. I started my remarks by repeating our mission, so to speak, and that's to create and deliver value to shareholders. Before we spun off Sunrise eight months ago, it was valued at around five and a half times EBITDA as part of Liberty Global. Today, as a Swiss public company, Sunrise trades at 8 times EBITDA with an 8% dividend yield. Now, look at it in a different way. Prior to the spinoff, Sunrise represented about 20% of our proportionate EBITDA. Today, the market cap of Sunrise exceeds the market cap of Liberty Global. where the remaining 80% of that proportion of EBITDA resides, along with over $15 of cash and growth investments. Clearly, there is a big disconnect here, and we intend to bridge that gap. Now, you're probably asking the question, how do we do that? How do we continue to unlock value? Well, the simple answer is to continue separating out the parts. So, we're sharing with you today that we are currently working together Very hard on how and when we might be able to separate out the remaining operating assets from Liberty Global. The rationale here is straightforward. It shouldn't be surprising to anyone. As I just said, the opportunity to eliminate that conglomerate discount in our stock is substantial. We've shown we can do it. And we have built-in advantages to achieve that that others don't. Whether it's our silo debt structure, or our tax position, or our Bermuda domicile, or our NASDAQ listing, we have a wide menu of options available to us, including spinoffs, tracking stocks, IPOs, etc. On the right-hand side of this slide, you'll see our portfolio of businesses and assets today, including Sunrise, which is now owned by all of us, Liberty shareholders. We believe that over time, each one of these businesses can be tracked, spun off, or listed, by the way, in multiple combinations. Now, what's the timing here? And this is where I need to be careful and not to be too vague, but we believe we can complete one or more of these transactions in the next 12 to 24 months. But rest assured, as we get closer to definitive plans, we will surely let you know what those are. It's also important to say that these transactions... are not dependent on any M&A, and that includes our joint venture markets. You can read into what I'm saying there. We don't need to consolidate to get these things done. The key takeaway is that the strategy illustrated here will not change. Our goal is to use all means available to reduce and essentially eliminate the discount in our stock, and I'm confident that we can do that. Charlie, over to you.

Thanks, Mike. Moving on to our operating highlights slide and starting with Virgin Meteor 02. In broadband, despite delivering our highest market share of gross ads during the quarter, net ads saw a similar decline to Q1, and this was driven by a continuation of higher churn due to the competitive pressures in the UK market, largely from the alt-nets, as well as the impact of one-touch switching. Fixed ARPU was stable after four consecutive quarters of growth. In postpaid, the decline in net ads was primarily driven by lower-value B2B disconnects in the quarter, but encouraging the O2 post-paid churn fell year over year, and we continue to drive initiatives to improve performance going forward and see growing momentum on the GIFGAF brand. We continued recent growth in mobile post-paid ARPU, supported by price adjustments, which were implemented from April. Moving to Vodafone Zikr, In broadband, despite the continued competitive fixed market dynamics, we saw encouraging early signs of the new strategy, with a modest improvement in broadband net ads supported by lower churn through the quarter. On fixed ARPU, despite the front book repricing impact starting to flow through, ARPU continues to have some support from the prior year price adjustments. Postpaid net ads were again impacted by B2B port ads, though it's worth noting that consumer net ads did grow modestly in the quarter. And mobile churn also improved, including the impact of our B brand, Holland's Noya. Turning to Telanet, we returned to broadband net ad growth, supported by improving churn and some easing on the competitive front. We continued to gain momentum with BASE's fixed mobile convergent offering, including expansion in the south of Belgium. And we delivered strong fixed ARPU growth, driven by the earlier implementation of the price adjustment across Telanet from April, which was compared to June in the prior year. Encouragingly, we saw positive postpaid net ads during the quarter, leveraging BASE to defend against the impact of Digi's launch in the market late last year. However, Belgian mobile postpaid ARPU remains under pressure from the competitive environment, especially B brand price points in the market. And then lastly, turning to Virgin Media Ireland, Broadband performance was impacted by an intensified competitive environment, resulting in higher churn during the quarter. Now, despite this, our growing wholesale traffic is acting as an offset and supporting strong fiber uptake. Fixed ARPU also remains under pressure due to the pricing environment. An Irish postpaid mobile saw an improvement performance following the launch of new mobile offers in May. The next slide sets out a summary of the quarterly revenue and EBITDA performance in our key markets. VM02 reported a modest revenue decline of 0.4% on a guidance basis in Q2, which was primarily driven by lower B2B fixed revenue, whilst overall fixed and mobile service revenue remained stable. Vodafone Zygo reported a revenue decline of 2.4% during the quarter, mainly driven by a decline in the fixed base and the impact of the front book repricing, which was partially offset by improved monetization of Zygo Sport and the UEFA Content. Telenet reported a revenue increase of 0.6%, supported by growth in both cable subscriptions off the back of an earlier price adjustment and continued strong programming revenues. Moving to our Q2 adjusted EBITDA performance, BMO2's adjusted EBITDA grew 1.1% on a guidance basis, supported by lower year-on-year operating expenses. And Vodafone Zigo's adjusted EBITDA declined 0.1% in the quarter, driven by the fixed base decline and the impact of its new strategy and, in particular, the repricing of its front book. Telanet's adjusted EBITDA grew 2.8%, supported by price adjustments and lower direct costs. The next slide provides an update on our key capital allocation metrics. Now, starting from the top left, in the first half of the year, we saw cash flow generation in line with our expectations and with our four-year guidance. As has been the case in previous years, we have limited cash distribution from the JVs in the first half, which tend to come in Q4. Moving to the bottom left, I wanted to reinforce a number of midterm free cash flow drivers. Firstly, there's no expected material U.S. tax expenses at Liberty Corporate from 2026, with the U.S. transition tax now behind us, and that's been around $100 million a year annual headwind. As we noted earlier in the year, Telenet's Servco free cash flow is expected to turn positive from 2026 as 5G and digital capex spend falls away. Similarly, with significant progress made on the Irish fibre-to-the-home rollout, capex is expected to fall from 2026, driving free cash flow back into positive territory at Virgin Media Ireland. Turning to our cash walk in the top right, our consolidated cash balance sits at $1.9 billion at the end of Q2, down modestly from our Q1 closing balance of $2.1 billion. We saw outflows in the quarter related to continued investments in the Liberty Growth portfolio and the execution of our share buyback program. Moving to the Liberty Growth walk in the bottom right, the fair market value of our Liberty Growth portfolio increased by around $100 million during Q2 to reach $3.4 billion. This was primarily driven by the increase in dollar terms of our largely European currency-denominated investments, as well as additional investments in EdgeConnex and Formula E. Additionally, the exit of our Vodafone collar position generated around $82 million in proceeds. Turning to our Treasury update, we maintain a strong balance sheet position, with our debt split equally between bank debt and bonds. We maintain a siloed and portable debt capital structure at our operating businesses, where the variable bank debt is fixed using independent swaps, allowing us to refinance the credit spreads on our near-term maturities, whilst also benefiting from the full term of the swaps. Across the Opcos, the cost of debt is around 4-5%, with an average tenor of approximately five years. Now, in general, we look to manage our debt maturities so there are no material refinancing commitments over the next two to three years. During the quarter, we remained very active, completing an $850 million private tap to extend the 2028 maturities of BMO2. And we also successfully completed just over $1.3 billion of debt financing for the Daisy acquisition by BMO2, which closed today. In aggregate, we've completed $5.5 billion of refinancings during 2025 at attractive spreads. We remain opportunistic and flexible in our financing approach, and we intend to continue to proactively push out existing maturities to maintain tenor. Turning to our guidance slide, we are improving guidance on two metrics. At Telenet, we're tightening our adjusted EBITDA guidance, which we now expect to be low single-digit decline, which is an improvement and at the top end of our previous guidance range. And this has really been supported by a strong first-half performance by the company. The revised guidance continues to include the tough comparator coming up at Q3 due to the prior year having a €17 million one-off deferred revenue benefit in Q3 of 2024. And at Liberty Services Incorporated, we're upgrading our adjusted EBITDA guidance to be around negative $175 million as opposed to $200 million. We are reconfirming all the remaining guidance metrics of BMO2, Butterfan, Ziggo and Telnet. Now, that concludes our prepared remarks for Q2, and I'd like to hand over to the operator for the questions and answers.