Liberty Global Ltd.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global's second quarter 2026 investor call. This call and the associated webcast are the property of Liberty Global in 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 our 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 10-Q and 10-K 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.

All right, welcome everyone. Thanks for joining us. We've got plenty to share with you today, so I'm just going to jump right in and then hand it over to Charlie. Of course, I've got the whole team here with me, so get your questions ready. And we are speaking from slides today. I'm going to kick it off on slide 5. I really like to start with this graphic. I think it demonstrates pretty clearly how we operate, how we allocate capital, and how we create value at Liberty Global. Our story is, of course, anchored by world-class telecom assets in Europe that generate $22 billion of revenue and $8 billion of EBITDA on the aggregate. You know that. And while each of these markets has its own unique operating characteristics... Europe as a whole, in my opinion, is catching a bit of a tailwind, right? Deregulation, sovereignty, the benefits of AI, they're colliding to change the narrative, and I think we'll benefit from those trends. Now, you know what I'm going to say next. Despite the size and scale and growth prospects of our businesses, we believe our stock today reflects no value for these assets, and I'll show you how I get to that conclusion in a moment. That belief is what is driving us to unlock the intrinsic value of our telecom businesses, and fortunately for us, unlike many of our peers, Thank you for joining us. We'll see you next time. where we have demonstrated again and again our ability to create significant value in media, sports, infrastructure, and tech. The recent sale of our stake in Edge Connects, which we talk about in this press release and in these slides, where we took out three quarters of a billion dollars, four times our investment over about 10 years, is just the latest example of that. And finally, we have reshaped our corporate or central structure to be both more agile, more efficient, and more focused on these two core platforms. As a reminder, we are generating today hundreds of millions of annual revenue into Liberty Global, the corporate group from tech, financial, and management services that we provide to both our telecom and growth operating companies. And when you factor in the recent restructuring of our operating model and reduction of our headcount, we've effectively brought down our net corporate costs by nearly 75% over the last two years. and we believe we're on our way to a break-even position as early as next year. So that's the broad picture. So let me jump into the three key highlights I think are most critical for you to know about this quarter. That's on the next slide. Number one, it was a strong quarter commercially and particularly in the Netherlands where Vodafone Ziggo continues to execute brilliantly, in fact, on its turnaround plan. This was our best consumer broadband performance in six years. I'll talk about that. As Charlie will outline, we're confirming all of our 2026 guidance across the board. Second, our plan to spin off the newly formed Ziggo Group, which of course consists of our Dutch and Belgian operations, is right on track. I'll go through this in some detail, but importantly, our fiber sharing arrangement with Proximus that will result in a single fixed network across 75% of Flanders was approved by the Belgian regulator yesterday. This is a big milestone for both our operational and balance sheet initiatives in this market. and I'm pleased to report that we will be closing on the acquisition of Vodafone and their 50% interest in the Dutch business at the end of this month. Then lastly, we have, the only way to describe it, overachieved in our plans to monetize assets and generate cash from our Liberty Growth portfolio. Year to date, we've raised $1.2 billion, well in excess of what we might have indicated, including $900 million from disposals of Liberty Growth and $340 million from an asset-backed loan on our wire stake in Belgium. I think it's important to point out that This $1.2 billion is above and beyond the 1.2 to 1.4 billion euros we intend to raise from asset sales in Belgium and Holland to reduce debt in those markets. As a result, we're increasing our year-end corporate cash forecast pro forma for the Vodafone acquisition from 1.5 billion to 2 billion. So essentially, we will end the year exactly where we started the year from a cash point of view. Now, the next slide goes deeper. Banner announced plans to spin off the newly formed Ziggo Group. The key takeaway here is that we are making substantial progress on all the key building blocks required to achieve this major milestone for shareholders. You'll see on the left side where we are on the three strategic and financial pillars that underpin the listing of Ziggo Group and the tangible progress we've made across each of them. As I mentioned, we have all the approvals we need and are on track to close on Vodafone's 50% stake in the Netherlands by the end of the month. This is obviously foundational for the creation of the Zygo Group, and it unlocks multiple other benefits, including the realization of financial and cross-market synergies. The completion of our Netco-Surfco split in Belgium into Wire and Telenet was another landmark achievement. This gave us four key things, right? A fully financed fiber build-out that is off the Zygo Group balance sheet. Secondly, the rationalization of the fiber market in Flanders through our cooperation agreement with Proximus I just referenced. The opportunity to raise capital and reduce debt through the sale of a portion of our wire stake and the rebalancing of debt between wire and Telenet, which will result in a less levered Telenet with a declining CapEx profile that goes into our Ziggo Group structure. And then finally, we've, of course, announced Steven Van Rooyen as the CEO of Ziggo Group and Yanni Frutier as the incoming CFO. And you should know we are making significant progress to round out the balance of the team, which we'll let you know about in September. Final piece of good news here, we have already increased, in our own minds, we haven't publicly increased it, but internally increased our estimate of the synergies from this transaction and expect to be meaningfully higher than the 1 billion NPV we announced previously. So stay tuned for more details on that. As a result of this progress, we are a bit more ambitious on the timing of the spinoff, and we're currently saying mid-27 versus H2-27. Now let's see how things transpire here. Could be even faster, let's see. And as we said in the past, the equity story is built around two things, reducing leverage to four and a half times and driving free cash flow to 500 million euro in the 2028 timeframe. The bridge to 500 million of free cash we talked about on our last call. And of course, the deleveraging is further supported by asset sales of the 1.2 to 1.4 billion euro that I just mentioned, all of which are underway and we're making substantial progress on and you'll probably learn about before our next call. Now, the right-hand side of the slide is the money shot here, as they say, so I'll take a moment to walk through these valuation metrics. They break down into three main components. On the bottom right, you'll see our current stock price, roughly $11 in the orange bar. We believe this represents a 20% discount to the fair market value of our cash and our Liberty Growth assets alone, and those are valued by independent appraisers, of course. You know what I'm going to say here? It implies essentially zero equity value attributed to our Liberty Telecom operations. Now, we don't need to debate that conclusion. Everyone, some of the parts may look a bit different. It's not the main point of the slide. Moving up the scale, about 19 months ago, we spun off Sunrise, which we now believe represents $12 per Liberty Global share. That's the red bar. Sunrise, as you know, is traded on the Swiss exchange between around 10.5% and 13.5%. Free cash flow yield of roughly eight times EBITDA and has really unlocked substantial value. And we believe over time, on a fully distributed basis, the Ziggo Group itself should trade on the Euronext at a value of up to $14 per Liberty share. Assuming we reach or can confidently guide towards the $500 million free cash flow target and the four and a half times leverage, and the market applies similar free cash flow yields to some. So that's what we're playing for here. It means that from an $18 stock, When we announce the Sunrise Spinoff, we have a clear opportunity to create $37 to $40 of value for shareholders, and you should assume we are squarely focused on just that, delivering that value, and we're making great progress on that goal every day. Now, our confidence in that goal, or the Ziggo Group, is bolstered, of course, by the great turnaround story at Vodafone Ziggo, which we'll highlight on the next slide. Essentially, just going to go right to the chart on the right-hand side of that slide. You can see in the second quarter last year, 2025, We lost 26,000 broadband subs and 5,000 mobile subs, and quite frankly, that was after quite a long period of declining performance. Through a combination of commercial strategies, including new pricing structures, new broadband bundles, new converged propositions, new premium sports content, and importantly, a strong campaign promoting the quality of our broadband network, Stephen and the team have delivered quarter after quarter of improved results since then. culminating in our first positive broadband quarter in Q2 since I think Q4 2022 and as I said the best performance in six years and that goes along with 32,000 new post-paid mobile subs so great progress on the operating performance there. The next slide shows you that performance and I've just discussed it so I'll just jump to the ARPU stats here for Vodafone Ziggo. Fixed ARPU was stable both sequentially and year-over-year around 56 euros and that's despite new front book pricing and Thank you for joining us. Broadband and mobile ARPUs are both up sequentially in Belgium and stable year over year. Now, moving to the UK. Before I jump into the operating results for VM02, let me just spend a minute highlighting where we see this business today and the core drivers of value tomorrow. First of all, it's important to remember that Virgin Media 02 is the only scaled challenger in the UK, one of Europe's largest markets. with the number one mobile network by connections and the number two most reliable broadband network according to recently released research, which we agree with. By the way, our fixed network currently reaches just under 19 million homes, nearly half of which are already fiber today. Now, you can add to that incredibly strong brands like Virgin Media, O2, GiffGaff, which support over 10 billion pounds of revenue, annual revenue, and facilitate regularly the launch of new services like O2 Satellite, which we were the first to do, Broadband, GIFGAF, Volt, our new FMC product, and a host of other commercial initiatives. So that's a strong foundation we have in the UK. Now, as we speak about every quarter, this is a highly competitive market. It's becoming a street fight in the consumer retail sector, particularly with Altnets and MVNOs, which means we have to continue getting sharper, becoming more agile and more innovative. And I like the moves we're making to achieve that. I've listed just a few of them on the right-hand side here. First and foremost, we've just hired Lisa McGowan, our new CEO of Consumer, now has the entire consumer division reporting to her. She spent 10 years at Sky launching broadband, mobile, and Skyglass, and in two weeks is already making a difference in our commercial strategy. So stay tuned for her keen eye and her strategic perspective on our consumer business. We have great potential in wholesale. First in mobile, where we generate today over $800 million of extremely profitable revenue, and we'll shortly launch Monzo to our list of MVNO customers. And in fixed wholesale, where we are striving every day to capitalize on our scale and our growing fiber footprint, which the Nectami acquisition will only advance once that's approved. Now, Lutz and the team are well underway with their AI-driven efficiency and growth programs. I'll talk about that in a minute. You're already aware of our commitment to advancing our network's For example, our 5G reach is now 88%, and even before fiber, we have 1G broadband available across the market. Now, these commitments will pay dividends, both in our B2C and B2B business. Finally, just a word on our capital structure in the UK, and Charlie's going to address this more specifically. The most important message I want you to hear from me is that both Liberty and Telefonica are completely aligned on our commitment to this business long-term. While we appreciate that leverage today exceeds our original targets, and as a result of I would urge you to remember that we have many tools at our disposal if necessary, both organic and inorganic, to drive greater pre-cash flow, stronger operating performance, and lower leverage over time. So more on that with Charlie in Q&A if you like. Turning to VMO2's quarterly operating results on the next slide, you can see that while our broadband and mobile net losses were better than a year ago, we are still encountering significant competitive activity and increased churn. I believe that the initiatives I just referenced and discussed on the prior slide, as well as the new consumer management team and structure, will address these challenges. Meanwhile, mobile operators are up sequentially and flat year over year as we focus on retention efforts there, primarily maintaining value over volume. Fixed ARPUs were flat sequentially, but down 4.6% year-over-year, and that's largely in line with overall pricing in the market. Now, Lutz is on, and of course, we can dig into these results further during the Q&A. Turning to Virgin Media Ireland, you'll see that broadband ad ads have been steady over the last five quarters, and that's supported principally by our wholesale fiber business. Good example of what we can do with wholesale. It's worth mentioning that our fiber rollout is on track to be substantially complete at the end of the year. Thank you for watching. The headline is the message here, right? The telco sector, in my view, is ready-made to realize AI benefits, which over time should be transformational for us and our peers. For starters, we sit on the assets, the very assets AI needs most to succeed. What am I referring to? Largely, large amounts of data that can't be replicated, massive cost structures like call centers, field ops, and networks that are built for automation, millions of daily touchpoints with consumers, and the infrastructure like connectivity and data centers that support the distribution layer for AI. And not surprisingly, we are looking to benefit from the very same opportunities that our peers are attacking, namely driving margins through cost efficiencies, driving customer and revenue growth through hyper-personalization, driving demand for our infrastructure, including power, space and cooling, and driving interest in our stock as investors rotate into sectors that are net beneficiaries of AI and not candidates for disruption. and we learned a lot of lessons like everybody, right? A big one for me has been finding the right balance between building and buying solutions. Increasingly, we're finding that partners, many of them listed here on this slide, are able to help us integrate faster, launch sooner and scale much more effectively. On the top right of the slide, we've shown some examples of what we're doing today and the results we're generating and things like reaching 65% of our VMO2 customer base with our personalization engine, generating 75% call Thank you for joining us. I know we are just scratching the surface here. Based on some work we did with McKinsey and Google, we analyzed some of our core operating expenses across the group to assess both the proportion of that cost, which could be addressed by AI over time, and what some more ambitious savings targets might look like. And you can see this on the bottom right of the chart. Show savings of between 20% and 40%, even as high as 70% at things like customer care. And we're not providing guidance here. These are just indications of what we think could and should be achievable over time. These are not fanciful numbers in my view. They look more realistic to me every day. Why is that? A lot of things are working in our favor here. On one hand, of course, we're implementing our own AI solutions with sophisticated and skilled partners to drive benefits, but Equally important, on the other hand, we're seeing our largest suppliers, typically software and outsourcing partners, looking for early renewals in exchange for passing along to us the significant AI savings they themselves are realizing and must realize to stay relevant. So we're getting it on both ends. Obviously, as we develop these initiatives more fully, we'll share more detail. And remember, this example just covers OpEx, right? There are significant revenue and CapEx benefits to be realized as well. And then finally, on my last slide, we're not only taking advantage of AI in our telecom and growth businesses, we're also prioritizing opportunities to invest in AI companies through our existing tech portfolio as part of Liberty Growth. Now, we discussed this, you know, on and off in the past, but let me get into a bit more detail here. As a reminder, we've had a pretty good track record investing in tech, typically companies in their scale-up phase and where we see some strategic value to our existing businesses. Good examples would be Plume or Aviatrix or Samba TV. Our track record has been good. Since inception, we've invested a total of $700 million into our tech portfolio and taken out around $600 million through distributions and exits. So we're funding our investments with proceeds. And with about net $100 million in today, we're sitting on a market valuation of $400 million, so in a good spot. Now, recently, we've pivoted to AI-driven investments where it makes sense. I'm not talking about OpenAI or SpaceX. Good examples would be Eleven Labs. Maybe some of you know this company, a leader in voice AI. with advanced automated customer service solutions that we're actually using today. Expo and cybersecurity and scan AI and data and automation are two good examples of companies directly addressing the operational backbone of a telco. So we're enhancing network security, optimizing processes and driving efficiency there. Arcus is optimizing the next generation of network infrastructure, a perfect fit for the rest of our infrastructure businesses like Atlas Edge. Now, if you look at these businesses, and you look them up, you'll see that we're typically investing with the smartest VC firms and tech companies. We're not alone here. We're partnering with smart money on these things. And going forward, we'll remain focused on AI infrastructure, models, invoice and video, cybersecurity, applications in things like customer care, sales and financing, all things that we think could be useful to us and also very successful. And lastly, I'll just point out that Our infrastructure vertical within Liberty Growth is playing the AI space as well through our data center investments in Atlas Edge, of course. We have hundreds of millions committed there and our alternative energy investments. So we're taking a 360 degree view of the AI opportunity, which we believe is the best way to innovate and transform our business over the long term. I think it's going to be one hell of a ride. I'm excited about the stuff we're doing and happy to get into any questions you may have. In the meantime, Charlie, over to you.

Thanks, Mike. Turning to our Q2 financial highlights, our OPCO performance continues to track against 2026 guidance, as I'll get into starting on the next slide. We closed the quarter with $2.4 billion of corporate cash, supported by proceeds from our EdgeConnex disposal, and additional corporate liquidity provided by a new wire stake asset-backed loan. and we've completed $4.1 billion of financings year-to-date, including the imminent separation of the Telenet and WIRE capital structures following the recent approval of the Fibre Sharing Agreement. The next slide sets out the Q2 financial results for our Benelux companies. And as a reminder, we now present Telenet's financial performance excluding WIRE to provide greater clarity given the full separation of the two companies and their capital structures. Thank you very much. Adjusted EBITDA declined in line with our guidance, reflecting the in-year impact of the How We Win plan and some one-off investments in network resilience, which we identified when we gave guidance. Cost reduction initiatives remained firmly on track and continue to support our expectation of returning the business to EBITDA growth from 2027. Adjusted EBITDA less P&E additions were lower year-on-year, primarily reflecting higher capex in the quarter related to the network resilience investments. At Telenet, revenue continued to be impacted by our strategic decision not to renew Belgium football rights for a season and a one-off adjustment related to a VAT dispute, partly offset by higher revenue from the new wire management services agreement. EBITDA growth was driven by the wire management services agreement and lower wire wholesale fees. Looking ahead, we will see adjusted EBITDA impacted by the return of costs associated with the new Dupont League contract in the second half. Tying to the UK and Ireland, Virgin Media O2 service revenue was broadly in line with our expectations. Competitive intensity in the fixed market remained elevated, whilst the O2 business continued to rationalize parts of its portfolio to support long-term growth, resulting in a reduction in headline revenues. This was partially offset by wholesale revenue growth in our market-leading MVNO business. There was also an improvement in mobile service revenue trends sequentially. Adjusted EBITDA declined by 2.9%, driven by lower revenue, but supported by further cost efficiency measures. At Virgin Media Ireland, service revenues modestly declined, impacted by continued competition in the consumer fixed markets, but because of this, adjusted EBITDA declined by 4.7%. Turning to the next slide, we remain committed to our disciplined capital allocation model, rotating capital into high-growth investments and strategic opportunities that drive long-term value creation. Capital intensity at our key opcos remains elevated, but all within guidance ranges for the full year. Virgin Meteor 2 continues to see elevated capex, driven by higher investments in mobile capacity, including spectrum integration from Vodafone, the ongoing fiber upgrade program, and IT digital spend, to put us in better position in terms of seamless FMC offerings. Vincenzo Capex was driven by network upgrades, including the DOCSIS 4.0 digitization efforts and one-off investments in network resilience and service reliability in 2026. Capex has meaningfully stepped down at Telenet as the 5G network upgrades are now largely complete and as we complete much of our investment in our digital platforms. We expect this to continue to trend down further next year. And Virgin Media Ireland Capex continues to step down in 2026 as we largely complete the Fibre upgrade of around 1 million premises. We expect Ireland to be free cash flow positive because of this in Q4 for the first time since the beginning of the upgrade program. Moving to the Liberty Growth Walk in the top right, the fair market value of our growth portfolio decreased to $2.9 billion in Q2. This was mainly driven by the successful sale of EdgeConnex, which I'll detail more on the next slide, and UBC Slovakia, partially offset by modest investments in Formula E, Nextfiber, and the IAO and TechPillar. The key fair market value adjustments were an increased value for EdgeConnex on sale and an increase in the Lionsgate stock price. Turning to our cash walk on the bottom right, we enter the quarter with a consolidated cash balance of $2.4 billion. This was mainly driven by the proceeds received from EdgeConnex and UPC Slovakia transactions. And this excludes the $340 million of additional liquidity provided by our loan facility backed by our wire stake. Half of which resides outside the Zygo Group, according to the terms of the Vodafone transaction. Next, I want to spend a moment on H-Connex, which was an excellent outcome for our growth portfolio and a clear demonstration of our strategy working as intended. We first invested back in 2015, taking a minority stake in what was then a relatively early stage data center business. Over the following 11 years, we funded its growth consistently and rationally, with around $177 million of gross equity in total. We supported a company as it scaled without overcommitting capital. And today, Edge Connects is a truly global platform with over 50 data centers across more than 40 markets and four continents, spanning the full spectrum of edge and hyperscale developments. Our exit strategy reflected the same discipline that characterized our investment approach. We monetized the position in stages, crystallizing value while maintaining upside exposure. We achieved a full exit in Q2 2026 with $604 million of proceeds from the final stake on top of $122 million from earlier sales. And the headline numbers speak for themselves. $177 million invested, $726 million of total proceeds and roughly a 30% IRR and a four times multiple of money. Now beyond the financial terms, the outcome of our EdgeConnects investment validates our right to play in digital infrastructure and data centers. We now have more than 10 years of hands-on experience in this space, and we're applying that playbook to our Atlas Edge investment. Moving to the Treasury slide, we've been proactively dealing with our 2028 and 2029 maturities. And overall, we have successfully refinanced more than $4 billion across our credit silos year-to-date. In Belgium, we are now formally separating the capital structures between Tamina and Waa, following BCA approval of Waa's Fibre Sharing Agreement with Proximus. Wire now can draw down the $5 billion fully underwritten facility to repay $2.3 billion into company loan with Telenet and a $0.4 billion Wire dividend as part of the wider debt rebalancing. Telenet will use the proceeds received to repay $2.5 billion of 2028 maturities. At Butterfield and Ziggo, we were able to refinance $1.3 billion, leaving us with no 2028 maturities and reducing 2029 maturities. We remain opportunistic here ahead of the spin-off, and as Mike noted, are on track to execute a number of deleveraging steps pre-spin. At Virgin Meteor O2, we remain opportunistic in the debt market as we look to continue to push out our 2029 maturities, but we acknowledge recent trading levels. Now, as Mike discussed, we are committed to a stable long-term capital structure of VMO2. We in Telefonica recognize that leverage is above our four to five times target, and the credit spreads are currently elevated, but we both believe that we are making the investments today that will deliver EBITDA growth to deleverage that company back towards our target range. We're investing capex at 22% of sales. It's actually 25% of sales if you exclude hardware sales, which is significantly above the average through the cycle for a telecom company to support this strategy. including significant near-term investments in the mobile and fixed networks to improve customer experience and competitiveness as well as in digital IT transformation to realize the cost reduction opportunities presented by AI. The small dividend projected to be paid to the shareholders will be reinvested into the Net Omnia transaction which is a key transaction for Virgin O2 to keep investing in its fiber plan, which we believe will further strengthen the product offering for VMO2 and help establish a credible second fiber network to compete with BT and unlock wholesale revenues. Both shareholders continue to look at inorganic opportunities to further strengthen the competitive position and financial performance of Virgin Media O2, as we did with both O2 Daisy and the Net Omnia transactions. Both shareholders recognize the importance of credit providers, which is why they're making these investments and acquisitions to support the long-term future of the company. Now, we remain on track to deliver against this strategy and will update investors as we always do in February of next year. And finally, turning to our full-year guidance for 2026, we are reconfirming all guidance metrics of BMO2, Vodafone Zigger, and Telenet, as well as our guidance for Corporate Adjusted EBITDA. and in addition, we're upgrading our full-year corporate cash target from $1.5 billion to $2 billion, supported by the EdgeConnect proceeds and wire asset by loan. And that concludes our prepared remarks for Q2 and over to you for questions.

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 1 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 allow your signal to reach our equipment. We'll pause for just a moment to give everyone an opportunity to join the queue. Your first question will go to the line of Joshua Mills with BNP Paribas. Joshua, your line is open.

Hi guys, thank you for taking the question. I'll keep it to the UK.

Hello? Operator?

Hello? Hello?

I'm going to start again. Who's that?

Yeah, start over please. Hi there. Yeah, thanks.

I hope you can hear me.

Can you hear me, sorry? We can hear you, yeah.

You're kind of going in and out?

Okay, thanks. So I just wanted to ask, firstly on the UK ARPU trends, I think in the past you've talked about the issues faced from declining legacy revenue, things like voice and TV, and today you're talking more about the declines being related to front book price competition. So it sounds to us like it's no longer just a legacy issue, it's more related to market conditions as they stand today. So my question on this ARPU trend is, firstly, is that a fair characterization? And if so, do you think that we're at trough ARPU declines and trough service delivery declines at the moment? Or could things continue to get worse in the second half, given the level of competition we see in the market? And then secondly, on the volume side of the equation for the UK, in the past, when you've had these kind of sub losses in markets like the Netherlands and Switzerland, you took the quite bold step to Rebase customers aggressively, proactively onto cheaper tariffs to try and stabilize the base. It looks from today's strong results on Vodafone's Zygo NetAds that that's had a good effect. So is it something you'd consider doing in the UK as well, or do you think that you're going to remain happy with the level of subscriber losses in the near term as long as you don't take too much of a hit on ARPU? Thank you.

Go ahead, Luke. Yeah. So thank you for the question. So, I mean, when we did the guidance for the year 26, we expected the market to be very competitive. Remember, I said that 70% of the service revenue guidance of minus 3 and minus 5% will come from fixed consumer, which exactly is now kicking in. So that's number one. Number two, to your point, is the market more competitive?

Yes, it is.

So just one number compared to Q2 25. The average selling price is down 4% in the market.

So I think your observation is right.

Now, where is this 4.6% coming from? The biggest driver for it is our own prevention. And I think what we are not doing is radically recontracting customers and forget about the ARPU. We have, remember, we have built a very sophisticated retention machine where we know down to every 60 homes what customers want and offer them that. And we have now built the same prevention machine. So the biggest driver for the up you down is prevention already, but in a very targeted way. And so we have now more than 80% of our customers on contracts with significant remaining term. And so we will keep doing exactly that in the future. Is this now a work button or not? That is hard to say because I don't know how the market really works. The market is very hot. There are some new promotions announced from Openreach. Ofcom has to accept them. If they will kick in from October this year, the market will be even more competitive. If not, I would expect the same competitive level and then our prevention will help us a bit more in the future. But it is hard to predict. I hope that helps.

Next question, Alberta.

Thank you, John. Yes, thank you. Our next question will go to the line of Robert Grindle with Deutsche Bank. Robert, your line is open.

Hi, everyone, and thank you. So well done on getting the BCA approval. I think it's taken a bit longer than you thought, but probably been prepping away in the meantime. What's the timeline from here on the Fliber collaboration and the separation of Telenet and alongside that the monetization of WIRE? Would you hope the monetization announcement is a 2026 one or is that in next year now because things have gone a bit more slowly? Thank you.

Thanks, Robert. It has taken a while to get to this point, but as I tried to articulate in my remarks, it's a building block. It's a foundational piece of the building block. and now that that's done, it's opening up a lot of key next steps. You mentioned one. I mean, Telenet is already split out. Wire and Telenet have been really separate businesses for a while. This is the second quarter, I believe, we've actually reported on them separately. So that's happened. What the BCA approval allows us to do is essentially rebalance the stack on each of those two entities and proceed, importantly, with the sale of a stake in Wire, which is well underway. You know, We've got actually, I think, six to eight people doing the work. I've hired advisors, and we will be diligently proceeding with that transaction through year-end, and it's possible that even as soon as year-end, but perhaps Q1, we will have concluded that transaction. But that's well underway, and just one of many things that the BCA approval unlocks, all of which, in our view, are very positive and helping accelerate our timing

The banking process will take place next week and it will access the $4.35 billion of wire financing, just for clarity, to fund the dividend.

Thank you John and thank you Robert for your question. Our next question will go to the line of Polo Tang with UBS. Polo, your line is open.

Thanks for taking the question. It's just about Vodafone Ziggo and broadband. Can you clarify when you will be able to start offering broadband and the Delta fiber footprint? Also, what do you think has had the biggest impact in terms of helping stabilize the Vodafone Ziggo broadband base? So was it the ESPN content offers? Was it pushing harder on recontracting customers? Was there a notable tailwind in terms of the Odido data breach or was it something else? And do you think that you can see improving or positive net ads going forward or is stable a more likely outcome? Thanks.

I don't know if Stephen was on and then off. Stephen, let me know if you're on.

Yeah. Hi, Mike. I'm on. Welcome to take those. Yeah, great. Hi, Paulo. Thanks for the question. Let me deal with the Delta question first. We're planning to roll out in the Delta footprint. We are operating in the second half of the year. We're not far from that now. So we expect to see that turn up in our numbers in the fourth quarter. And then in terms of stabilizing, look, as you've seen progressively over the last six quarters, it's not one thing that we've done. It's a sequence of a number of things we've done, including bringing our front book pricing in line with the marketplace, investing in the core proposition, increasing our speeds. We're the only ones offering two gigabit across most of the country today. differentiating both with Wi-Fi Guarantee and now laterally with the CSPN bundle and changing our marketing, focusing more on connectivity and competing harder than we had previously. So I think it's a combination of things that I think have helped us get to this point. As a result, I think it's I think it's fair to say that we are pursuing sustainability of that growth. So in terms of providing guidance going forward, because we put in, I think, a number of pillars that will help us continue to build the momentum that we've seen, our expectation is to continue to grow through the second half of the year.

Thanks. Our next question will go to the line of Nick Lyall with Varenberg. Nick, your line is open.

Thanks very much. I hope you can hear me. Hello, guys. Just a quick question again on the UK to follow up on Josh's, please. What makes you think this isn't a long-term decline for the UK? I'm just interested. Your pricing is quite a bit above BT's and substantially above the alt still. So I take Lucy's point that he's got a lot of customers Thanks very much.

Charlie, you want to address the first one?

Yeah, just sitting on the, I think the point we're trying to make is both Telefonica and us are firmly behind this company. We're very committed. We're investing at very elevated levels to secure the long-term competitiveness of the business. And we have been ready to do inorganic moves, whether it's buying and indeed selling. As you know, we've sold, you know, for example, CTIL. So it's not to be specific about whether we're buying or selling. It's more to say, look, we are right behind this company. and we think the company is in the right direction performing to the plan we set it for this year and looking forward to giving the update to everybody in February on the next phase of financial development.

I'd just add to that that the Netanya deal would be an example of an inorganic transaction that we think on balance is beneficial to VMO2 from both a credit and equity perspective for all the reasons we've articulated along the way. So inorganic could include everything that's not simply driving cost reduction or revenue growth or free cash flow in the operating business. So it's a wide definition. Looch, do you want to address the first question?

Looch, you might be on mute. Sorry for that. Yes, I will.

Yeah, my answer to your question is the following. We have three very strong brands, right? And it's not only Virgin Media, it's also O2 and GifGov. And ultimately, we will be able to sell any product with any of these three brands. And we have just launched GifGov Broadband and we are starting to gain traction there. So high level, three brands addressing different target groups and on average, Every second household is a customer of ours, but there's only on average one or three products for us. Why we have very strong mobile connectivity, very strong broadband connectivity, very strong video products for different technology. So therefore, even if you get fiber very cheap, I think the combination across everything to get this in a very good value for money with good service, this is our strategy and you will progressing us in that way. and we have to be prepared that the competitiveness stays like it is today.

I think also the flip side of that equation is of course what things I was mentioning around driving transformation in our operating model, our operating costs and ultimately a declining CapEx profile. So we're focused as you should be on the profitability of these businesses, the ability to generate free cash over the long term We've just been describing revenue, certainly that's a big piece of it and Luce didn't mention the business side, enterprise as well as wholesale. So there's many levers to drive the top line but far more levers to drive profitability between there and free cash and a significant part of the company's time, effort, energy and shareholders is to ensure that we are optimizing the P&L of the business. So Lots of levers to pull to drive what we think is the most important metric, and that's long-term free cash flow, only one of which is revenue, and I think Lutz has addressed that pretty well. Thanks, Nick.

That's great.

Thank you very much.

Thank you, Nick. Our next question will go to the line of Ulrich Grace with Bernstein Society General Group. Ulrich, your line is open.

Thanks very much.

I wanted to ask on the quantification of the AI cost benefits.

That was quite interesting. I thought, Mike, the question I would have is how confident are you that you can hold on to these kind of benefits? Point being, cost benefits that are available to the industry have kind of diffused away. You mentioned McKinsey's involved in those kind of companies are a mechanism for diffusion, one of them, but there are others. So what are the reasons why such cost benefits are ultimately good for the bottom line in the longer term? That will be interesting here as well. Thank you.

Yeah, if you mean good for the bottom line or if you mean sustainable, I think you asked both questions. I'll repeat what I said on the call, which is that it's coming at us from both directions. Sort of self-induced, organically driven efficiencies, improvements, All the things that we know AI can do. You're reading about it every day. We're on that. And the list of projects is way too long to put on a slide. But every company in the group, both in the growth and the telecom portfolio, is implementing today solutions that are making them more efficient, faster, better, more profitable. And that's happening organically as we speak. I'm really thinking through and addressing the longer-term impact because the trend is only going one way. Models are getting smarter. More and more companies are arriving on the scene, taking advantage of that intelligence, driving solutions at scale for companies like ours and others. And we don't see anything on the horizon that would change that trajectory. If you just extrapolate from where intelligence is moving and how costs are evolving in that space for beneficiaries like us, it's just going to get faster and cheaper. and as we apply that logic to more and more of our business, we just see nothing but upside. I mean, we're only 20, 25% in the cloud. I repeat that. 75, 80% of our business is still on-prem. So there's so many things our industry, and we're not different than any other telco, has yet to implement and take advantage of that I think it's almost irresponsible not to be that ambitious. And I'm pounding the table every day with my team to tell me why we can't be that ambitious. It's nice to have third parties who are on that ride with us, whether they're consultants or technology companies. You have to be thinking that broadly and I think that aggressively over the next two to three years. It's moving that fast. That's how we're approaching it. It's great to do the things we're doing. I'm proud of our industry and I'm proud of my team but it's just the start. There has to be a rethink of our operating models, how we're managing our businesses, talent and all the technology and software required to drive these kinds of step change improvements. So I think it's real, I think it's sustainable and we're anxiously working to deliver it.

Thank you Ulrich. Our next question will go to the line of Matthew Herrigan with Stonex. Matthew, your line is open.

Thank you. On the industrial kind of blocking and tackling AI, you kind of answered about 80% of my question, but I assume you don't have the issues with token costs, which are surprising some people in terms of what is being charged now. There's even some talk of a bit of a Bate and Switch, and talking with some of your U.S. peers, I think they feel like there's a touch of discernible benefit in 27 on a net basis. And then after that, you really get an inflection point. I mean, do you think you're going to see a decided inflection point in 28, 29, late decade, or is this just kind of a gradual process? And then lastly, you talked on costs, which are very quantifiable. and predictable on the revenue side. I assume that was also addressed by McKinsey and Google, but you'd rather kind of keep that closed kimono because it's a little harder to realize and you don't want to go too aggressive on it. Thanks.

Yeah, and I'll ask Enrique to jump in here too. Look, on the revenue side and the CapEx side, those numbers generally are not as high as the ones we put on the slide, but they're still significant.

Thank you for joining us.

We intend and are doing that across the board, but we figured one piece at a time. I think it is gradual. I don't think it's in one quarter all of a sudden everything hits. It will be gradual and I think for us that's the only way to do it. Why is it? Because as you hear from others in the industry, it's not simply the technology, it's not simply a great partner, it's also your organization, your talent, your operating model. No point in having all this great stuff and you're not able to implement it. You don't have the people, the structures to implement it. So it is a journey, but everybody's on it. We're on it and we're on it from end to end, really. And then I don't know, Enrique, you want to talk more about the economics of AI tokens and how we see that progressing?

Absolutely. Thank you. First of all, like anybody else in the industry, we're watching The evolution of both token costs and the resulting benefits pretty closely. And I can say categorically, we don't see a major issue with the increase in some cases of token costs because we've been, I think, pretty disciplined in making sure that we're applying those tokens against business cases that do bring us net benefits. So, you know, I do believe that this will be a continuing story, but I see a significant net benefit, even though, like anybody else, we do see an increase in the usage of tokens and the related costs.

Great. Thanks, Mike, Enrique. Enjoy the rest of your summers. Thanks.

Thank you, Matthew. For our next question, we'll go to the line of James Rapser with Newstreet Research. James, your line is open.

Yes, thank you very much indeed. Good afternoon. So the question please around kind of Virgin Media 02 is if I look at kind of your partner Telefonica, they've seen declining revenues in Germany and just two days ago they announced a major cost restructuring program. and obviously Telefonica has just helped to appoint a new CFO at Virgin Media 02. So I'm wondering whether you see the scope to take similar action at Virgin Media 02 and to kind of take on a more radical approach to cost reductions as we've seen your partner also announce in Germany. And you talked about kind of looking to support the business and at the same time you've just raised your cash target at the top co. Now to $2 billion, would you consider injecting any of that cash back into Virgin Media O2 to help it with its deleveraging? Thank you.

Thanks, James. Listen, premature to discuss capital allocation. We think the business is obviously generating free cash today, and we think can generate significantly more free cash tomorrow. On your cost reduction question, Certainly that is something we are looking at as well. We're in the business planning phase right now. This is when Lutz and the team are sitting down doing the work on our long-range plans. And of course, when we mentioned organic and inorganic tools to continue to drive free cash flow and reduce leverage, that is, as you state, a very realistic one. And so you should assume that those are the kind of things we'll be looking at as we should. And I don't know if Charlie wants to add anything to that.

Now, I think, look, you know, the business is on track with the plan that they set out at the beginning of the year. They've reconfirmed guidance. We're going through planning exercise. We do understand leverage is outside the range. We take it seriously. Give us the time to continue to work through them with the management, the right next steps, which could involve cost reductions. And we'll come back to you in February.

Could you, I mean, do you see kind of scope there? Sorry. Okay. Thank you very much.

Thank you, James. Our next question will go to the line of David Wright with Bank of America. David, your line is open.

Hi, guys. I hope you can hear me. Thank you for the presentation and opportunity to ask questions. Mine is a little around the accounting change in VMO2. It just seemed a little unintuitive to me to be amortizing the commissions, extending the amortization period as you are accruing increasing sort of net losses and higher churn that seems like quite the opposite thing you would do so I'm wondering why you've chosen to do that and on what basis and I guess the second point would be is it just a one-off impact or should we now be seeing this sort of run over a period to sort of support the EBITDA line and I guess my sort of final question was does this adjustment sit within the EBITDA guidance or is it outside the EBITDA guidance? Was it anticipated when you gave the EBITDA guidance? That would be really interesting to me and then Charlie I sort of have to ask you know you kind of mentioned this four-year VM02 sort of I don't want to say revisit but sort of you know four-year update and it seems like, you know, that could be sort of a more significant event. Should we think about it that way or are you just talking about sort of general business planning as usual? Thank you, James. Charlie, both for you.

Yeah, canning, yeah. First of all, and also the second question that is the usual update in February. I don't want to make a big deal about it. It's more just to say we obviously get guidance every year. We've got guidance for this year, we're on track and As we always do, it'll be irregular. There's nothing particularly sinister or magical about next February. In terms of accounting, the magic of accounting estimates, we are always revising accounting estimates. It's always based on facts. It's always aligned with our auditor and it's always based on our real life experience. So I agree with you. Maybe it seems odd in the context of the market competition, but these actually are the facts and this is the right way we believe to account for it. And it's not just us. It's obviously we've run through with the auditor. It has some impact on EBITDA. Was that anticipated in the original guidance? Probably not. But on the other hand, it's not that material number. It's worth pointing out the key metric we're looking at here is free cash flow. And it's obviously a not-mash item, but I do agree it has a short-term benefit on EBITDA. But in years past, it's worked against us. I would consider this in the sort of swings and roundabouts of accounting.

Sorry, one thing I can add.

I think I can help you to answer what is, when you do a lot of prevention, you bring customers into a new 24-month contract length, and that is impacting accounting the rate up. So if you add these two things together, I think what is maybe on the surface counterintuitive makes a lot of sense. So a lot of new re-contracting, you pay commissions for that and you of course then accrue them over the new contract or lifetime of the customer. Just one thing, so it all makes sense. And then the other thing, what Charlie said, concrete numbers. Last year we had tons and tons working for us. We don't have this. This makes... and even a higher amount. And now this goes the other way. So it's always small items, big companies like ours, but it's not explicitly outside the guidance. It's smaller. Thank you, Lutz.

Thank you. And with that, we will conclude the Q&A session. I would now like to pass the conference back over to you, Mr. Mike Fries, for any closing remarks.

Great. I'll keep it brief. Thanks for joining us. We always appreciate that. Lots of information to digest. You know where to find us if you have questions. Be a busy summer for us, as you can imagine, across the group, particularly in Benelux. So stay tuned for announcements there and stay well. Speak soon. Thanks very much.

Ladies and gentlemen, this concludes Liberty Global's second quarter 2026 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.