Liberty Global Ltd. Q1 FY2024 earnings call

Management Statement and Operational Highlights

• Strategic Plan: Focused on maximizing intrinsic value of core assets. Made 5 announcements in last 10 weeks, including plans to list Swiss operating business and spin off shares.
• Balance Sheet: Strong with $3.2 billion consolidated cash (rises to $3.9 billion including liquid securities). Disciplined capital allocation with buyback program, deleveraging, and strategic ventures.
• Investments for Growth: Fiber upgrade/extension plans in U.K., Ireland, Belgium to reach ~20 million fiber-to-the-home premises by 2026. 5G B2B opportunities emerging. Investments in digital NII and AI for revenue growth and operational efficiency.
• Key Initiatives: Progress on FMC champions (U.K. fixed network carve-out), Benelux synergies, ventures sales (All3Media sale closing May 15, $400M cash proceeds), buyback program (purchased ~3% of shares YTD), and Sunrise spin (target Q4 2024, injecting CHF 1.5B to delever pre-spin).

Segment Performance

• Virgin Media O2: Delivered 5,000 broadband net adds in Q1. Fixed ARPU improved. Mobile service revenue growth. Contributed to overall FMC telco operations.
• VodafoneZiggo: Revenue up close to 2% this quarter. Mobile service revenue growth over 7%. Fixed ARPU grew due to mid-2023 price adjustments.
• Telenet: Stable revenue. Churn improved post-IT migration. Fixed ARPU up in last 3 quarters.
• Sunrise: Strong quarter with 6,000 broadband net adds, postpaid mobile ads growth. Significant free cash flow margins. Represents ~12% of aggregate EBITDA.

Guidance

• Sunrise Spin: Target Q4 2024 to complete separation and listing on Swiss Exchange, spinning off 100% shares to Liberty Global shareholders. Injecting CHF 1.5B to delever Sunrise pre-spin. Dividend from Sunrise expected to be min CHF 240M/year, representing 4% yield on Liberty Global's market cap.
• Buyback: Authorized up to 10% share buyback in 2024, purchased ~3% YTD.
• Asset Sales: Surpassed $500M in asset sales YTD, with ~$300M-$400M pipeline by year-end.

Risks

• Macro Environment: Uncertainty around interest rates and overall economic conditions.
• Competition: Altnet competition in markets like the U.K. impacting net adds and pricing.
• Liquidity: Concerns about market cap shrinkage post-Sunrise spin affecting liquidity and buyback ability.

Question and Answer

Q: About VodafoneZiggo's NPS and altnet impact in the Netherlands A: Ritchy Drost stated NPS scores are gradually increasing across brands, and altnet impact is from price/promotions rather than fiber build.

Q: U.K. postpaid subscriber losses related to billing system A: Lutz Schüler mentioned CRM migration caused temporary blip, with service revenue growth and view that it's a blip not long-term trend.

Q: Benelux holdco interest and U.K. net adds A: Michael Fries discussed interest from private equity in Benelux, and Lutz Schüler addressed U.K. net adds as impacted by market weakness and altnet promotions but confident in nexfibre sales ramp.

Q: Liquidity post-Sunrise spin and nexfibre marketing A: Michael Fries acknowledged liquidity concerns but expected RemainCo re-rating, and Lutz Schüler detailed nexfibre sales ramping with 1 million homes built and increasing month-over-month sales.