Liberty Global Ltd. Q4 FY2023 earnings call

Management Statement and Operational Highlights

• Results: Strong Q4 with accelerated EBITDA at BMO 2 and Sunrise, exceeded distributable cash flow guidance excluding unexpected tax payment. Ahead of plan on synergy execution.
• Subscriber Trends: Positive net adds in core markets; improved broadband performance in Switzerland, Belgium, and Holland; mobile flanker brand strategies supporting growth.
• Key Drivers: Mobile growth driven by price rises, loyalty programs, flanker brands, and 5G upgrades. Fixed business drivers include combating video/voice declines, bundling services, price rises, and network upgrades/expansions.
• Strategy Update: Focus on maximizing core asset value; listing and spinning off Sunrise; creating Liberty Global Benelux; establishing U.K. NetCo; selling All3Media; and shareholder remuneration plans including buybacks and spin-offs.

Segment Performance

• Virgin Media O2: Delivered positive postpaid mobile and broadband net adds despite competitive market. Complementary dual brand strategy with O2 and Giffgaff drove positive postpaid adds.
• BMO 2: Market leader in broadband with customers averaging 5x the speed of competitors, increasing demand for higher speed services.
• Switzerland: Improved Q4 broadband net adds due to commercial initiatives like Black Friday campaign, reduced effects from UPC migration, and mobile flanker brand strategy supporting postpaid growth.
• Belgium: Improved commercial momentum in Q4 but impacted by elevated churn and IT migration issues; Telenet's digital platform and fiber services to drive future momentum.
• Holland: Highly competitive broadband market with losses, but response to speed increases and smart WiFi offers; strong mobile postpaid growth despite price rise.

Guidance

• 2024 Operating Company Guidance:
  • BMO 2: Stable to declining revenues, low to mid-single-digit adjusted EBITDA decline, property and equipment additions ~GBP 2-2.2B, adjusted free cash flow ~GBP 500M.
  • Sunrise: Stable revenue, stable to low single-digit adjusted EBITDA growth, property and equipment additions 16%-18% of sales, adjusted free cash flow CHF 360-400M.
  • Vodafone Ziggo: Continued revenue growth, low single-digit adjusted EBITDA growth, property and equipment additions 21%-23% of sales, adjusted free cash flow ~EUR 300M.
  • Telenet: Broadly stable revenues, mid-single-digit rebased adjusted EBITDA decline, property and equipment additions ~32% of revenue, positive free cash flow EUR 50-75M.

Risks

• Macro and competitive headwinds impacting revenues and margins.
• Elevated churn in some markets due to competition and IT issues.
• Impact of regulatory changes (e.g., Ofcom's proposed pricing ban) on pricing strategies.
• Interest rate and currency risks affecting debt servicing and financial results.
• Economic conditions impacting consumer spending on broadband and mobile services.

Question and Answer

Q: On the U.K. fiber trajectory and CapEx guidance.

A: Mike Fries and Lutz Schüler discussed fiber mix (1.5M homes from upgrade, ~800k from Nexfibre, ~1.9M from Lightning program), CapEx expectations, and cost to capture with one-offs in 2023 reducing free cash flow impact in future years.

Q: About the Benelux holding company and synergies.

A: Charlie Bracken clarified cash positions and tax considerations, while Mike Fries discussed the strategic benefits of creating Liberty Global Benelux for synergies, tax optimization, and equity market opportunities.

Q: On Switzerland's competitive dynamics.

A: André Krause noted stable competitive dynamics, no aggressive promotional activity, but positive net adds due to Q4 campaigns and price rise, with delayed activations in Q1.