Liberty Global Ltd. Q3 FY2026 earnings call

• Ziggo Group Spinoff: Confirmed timeline for Q2 2027 spinoff of Ziggo Group. Leadership team finalized (Steven van Rooyen as CEO, Yanni Frutier as CFO). Target synergies exceed €1 billion. Deleveraging progress via Vodafone Ziggo Towers sale (€670 million gross proceeds) and wire sell-downs. DOCSIS 4 launch in Netherlands validates HFC strategy over fiber build.
• Virgin Media O2 (VMO2) Strategic Plan: Announced radical cost reduction plan targeting £400 million run-rate savings next year, growing to £800 million by 2029. Includes 30 headcount reduction and organizational simplification. Decision made to halt further fiber builds on VMO2 balance sheet; focus shifts to upgrading nearly 70% of HFC network to 2Gbps speeds.
• Netomnia Transaction: Liberty Global remains committed to acquiring Netomnia but expresses deep disappointment with the CMA's interim report, calling it fundamentally flawed. The decision to halt VMO2 fiber builds is partly attributed to regulatory uncertainty surrounding this deal.
• Capital Allocation & Balance Sheet: Corporate cash position at $2 billion with no debt. No intention to inject corporate cash into telecom assets unless it functions as a tax-free dividend to shareholders. Targeting $1.8 billion year-end cash after buybacks. Siloed capital structures remain intact with no material maturities until 2029 for Ziggo entities.

The transcript does not provide a consolidated revenue breakdown by product segment for Liberty Global as a whole. However, specific operational highlights are noted for key subsidiaries:

• Vodafone Ziggo (Netherlands): Returned to positive revenue growth for the first time since 2024, driven by price indexation and customer growth. Adjusted EBITDA declined 6.9% in line with guidance.
• Telenet (Belgium): Revenue was broadly stable. Adjusted EBITDA declined due to lower subscription revenues and higher programming costs.
• Virgin Media O2 (UK): Total service revenue was broadly in line with expectations despite consumer fixed market pressure. Adjusted EBITDA declined 2.6%.
• Virgin Media Ireland: Service revenues declined modestly; Adjusted EBITDA was impacted by a €9 million one-off adjustment.

• Ziggo Group: Maintained long-term targets of $500 million free cash flow and 4.5x leverage multiple by 2028. Synergies expected to be well in excess of €1 billion.
• VMO2: Provided no specific top-line or bottom-line financial guidance for 2026/2027. Will provide a capital markets update in Q1 2027 following Board approval of the new strategic plan. Reviewing options for cash distribution to shareholders in 2026.
• Corporate: Maintaining full-year guidance metrics across Liberty Telecom and corporate operations, excluding VMO2 cash distribution specifics.

• Regulatory Risk (UK): Significant risk associated with the UK Competition and Markets Authority (CMA) review of the Netomnia transaction. Management views the CMA's interim report as flawed and resistant to commercial reality. Potential for unfavorable regulatory outcomes impacting strategic plans.
• Market Competition: Intense price competition in the UK fixed and mobile markets, including entry of unsustainable fiber players and erosion of mobile pricing. Declining retail revenue in the UK sector (£5 billion decline over 5 years).
• Operational Execution: Risks related to executing the complex VMO2 transformation plan, including cost savings realization and cultural integration under new leadership.

Q: Analyst asked if halting VMO2 fiber builds implies ambition to wholesale existing fiber or rent from others, and if renting provides confidence for service revenue growth.

A: Mike Fries clarified that while they won't build third fiber networks, they remain opportunistic about using other fiber via wholesale/access where economically sensible. Lutz Schueler added that final decisions on selling/existing fiber will be made in November. They cannot guide on service revenue yet but aim for growing operating free cash flow, with details coming at the Q1 Capital Markets Day. Renting vs. building is part of a broader strategy to extend reach without over-building in saturated areas.

Q: Analyst questioned the rationale for stopping fiber builds given CMA counterfactuals, asking if renting offers enough confidence for medium-term revenue growth.

A: Lutz Schueler explained that HFC serves customers well for the near term (next few years) via 2GIG upgrades. Building a third fiber network is not economically viable. They will use partners/inorganic opportunities for off-footprint expansion. Mike Fries noted the regulatory environment is a 'wake-up call' and pushed them to focus on what they control: driving growth via 2GIP products and untapped opportunities rather than waiting for regulators.

Q: Analyst asked about VMO2 cost-cut drivers (inefficiencies vs. debt stack) and debt restructuring possibilities.

A: Lutz Schueler cited three drivers: new consumer CEO Lisa McGowan’s simplified brand-centric strategy, shareholder pressure for cost savings, and the strategic decision to stop fiber builds. Charlie Bracken noted debt leverage is trending above the 4-5x target but has no maturities before 2029. More details on refinancing and debt management will be shared in February around Q4 results.

Q: Analyst stress-tested whether Liberty would inject corporate cash into Ziggo/VMO2 if leverage targets were missed or debt restructuring occurred.

A: Mike Fries reaffirmed they do not intend to put cash into telecom assets generally. An exception might exist only if the injection acts as a tax-free dividend to shareholders (like the Sunrise case), which is unlikely here as the business doesn't need a boost. He emphasized the spinoff is happening regardless of stock price or minor leverage fluctuations, viewing any potential equity injection as a dividend event rather than operational investment.

Q: Analyst asked about Vodafone Ziggo’s deleveraging path to 4.5x and $500M FCF, and VMO2’s strategy to improve subscriber trends.

A: Charlie Bracken confirmed the roadmap to 4.5x leverage and $500M FCF exists, supported by EBITDA turnaround and significant synergies exceeding €1B, though line-item bridges will come later. Stephen van Rooyen expects EBITDA improvement next year. Lutz Schueler stated VMO2 aims for stabilized top-line and sustainable operating FCF growth, not just cost cuts, with details to follow in Q1.