Prepared remarks
Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global's First Quarter 2025 Investor Call. This call and the associated webcast are the property of Liberty Global and 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 material 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 2 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, 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.
Great, and welcome, everyone. Thank you for joining our first quarter investor call. We have a lot to discuss, so let's dive straight into the prepared remarks. After that, we look forward to your questions, and I'll involve members of our management team as needed. Just a reminder that we will be using slides today, which those of you on the webcast should be able to view now. If not, they are always available on our website. I will begin on Slide 3 with some broad observations. As you may recall, 15 months ago on this call, we presented a strategic plan aimed at creating value and, importantly, finding ways to deliver this value to our shareholders. The tax-free spin-off of Sunrise last November was a significant first step in that plan and continues to perform well in the Swiss market. Just a few months ago, during our year-end call, we assessed progress on the rest of our strategic initiatives and discussed the tactical measures we are currently implementing to create value across our three core platforms: Liberty Telecom, Liberty Growth, and Liberty Services.
The main takeaway from this call is that the team and I are fully committed to these goals, and we are making significant progress across the board. This includes enhancing commercial momentum and upgrading our networks in a competitive telecom market; optimizing our corporate structure and service platforms; and with $2.1 billion in cash and an additional $500 million to $750 million in asset sales planned for this year, we are being strategic about capital allocation. Let's explore each point. Starting with Liberty Telecom on slide 4, we see substantial opportunities for value creation, and our strategy is clear. We will pursue transactions that crystallize and directly deliver value to shareholders in the medium term. Remember, Sunrise was valued at around 5.5 times EBITDA as part of Liberty Global. Now, as an independent company in Switzerland, it is trading at over 8 times EBITDA, which is roughly $11 per Liberty share, equating to our current market cap.
Sunrise contributed only 10% of our total EBITDA. We don’t expect to replicate this for every case, but there are numerous opportunities for value creation among our operating companies, which encompass four markets, 80 million connections, $22 billion in revenue, and $8 billion in EBITDA. We are concentrating on three near-term taxable goals for Liberty Telecom. The first is to finance and monetize network infrastructure wherever possible. The motivations for this will vary by market, but we recognize that fixed infrastructure in Europe holds high value, so we're looking to raise capital at favorable multiples, accelerate network upgrades and deployments, and create strategic platforms for market consolidation. We believe this is particularly evident in Belgium. By establishing NetCo, named Wyre, we have forged an exclusive wholesale relationship with Orange, secured favorable CapEx financing for our fiber upgrades, and begun strategic discussions with the incumbent Proximus about network sharing, which are progressing well.
Ultimately, this will enable us to bring in equity partners on favorable terms. In Ireland, we expect our fiber upgrade to reach 80% of our coverage area by the end of this year, enhancing our competitive edge. This progress has allowed us to strike wholesale agreements with both Sky and Vodafone, creating new revenue streams and reshaping the market to our advantage. In the UK, I can confirm today that we have temporarily halted our NetCo plans at the VMO2 level to align with Telefonica’s strategic review. Meanwhile, nexfibre has revised its goals and is now aiming for 2.5 million fiber homes by year-end. We pride ourselves on being good partners and appreciate Telefonica’s position, and we will have more to share as the year progresses. For now, there are several ways to further strengthen VMO2’s competitive stance in the UK. Our services currently reach 7 million fiber homes, and for reference, VMO2 saw record sales and net additions last month within the nexfibre footprint.
In the Netherlands, Stephen van Rooyen has made considerable progress on a new strategic plan that will be discussed shortly. This plan emphasizes a commitment to DOCSIS 4 and the enhancement of our broadband network, addressing the question of whether fiber infrastructure is needed in the Netherlands, which the answer is no. Our second tactical goal is to organize our strategic and operational plans to foster long-term free cash flow growth and enable gradual deleveraging. The Sunrise spin reinforced that stable free cash flow and lower leverage are critical for value creation. Charlie will elaborate on this shortly, but we constantly monitor our operating companies’ balance sheets, having refinanced all 2027 maturities in the last year. Additionally, we extended €500 million of Telenet's debt at historically consistent rates in the past quarter. We recognize that our leverage exceeds our targets in some cases, which is why we are selling our Dutch towers and plan to use the proceeds to pay down debt.
Lastly, it is crucial that we maintain commercial momentum across our businesses. While every market differs, competitive intensity is rising everywhere we operate, which is characteristic of our industry today. Beyond stabilizing our network strategies, we see three key elements that are proving effective across our regions. We are supporting customer acquisition with flanker brands that target different market segments. Giffgaff complements the O2 brand in the UK, and we have just launched a growing broadband option within this segment. Illinois has been recognized as the top mobile provider in the Netherlands and operates in Belgium, allowing us to compete effectively in both low-end market segments and to expand into new southern areas where we foresee substantial mobile and broadband growth. Across all markets, we are concentrating on base management and customer retention, which involves enhancing the value of our loyalty schemes to encourage stickiness and facilitate cross-sell and up-sell.
In markets like the UK, we are increasing ARPU using AI tools that proactively address customer contracts and churn. We are fortifying our base with initiatives like a 25% speed increase in the Netherlands and Check and Smile service programs in Belgium. Additionally, we are refining our competitive position with updated packaging and pricing. VMO2 has refreshed its mobile offerings with improved airtime rates and multi-SIM options. As we will discuss further, VodafoneZiggo has reduced its front book pricing to align with KPN. Many of these measures are establishing a foundation for greater reach, stronger sales, improved retention, higher ARPU, and enhanced service quality, particularly over the medium term. While we are seeing positive trends in various markets today, competition for broadband and mobile customers remains fierce. This is reflected in our Q1 subscriber and operating results on Slide 5.
We observed stable broadband losses, with a slight dip in the UK, and a decline in postpaid mobile subscriptions across most markets, excluding the Netherlands. Nonetheless, these challenges were mitigated by robust fixed ARPU growth almost everywhere, reflecting price increases and the commercial initiatives mentioned earlier. Briefly going over each market: in the UK, broadband net additions dropped due to heightened churn and overall market volatility resulting from the new one-touch switch policy and aggressive offers from AltNets. The team is adapting their retention strategies while maintaining a focus on value, resulting in another quarter of solid fixed ARPU growth. With over 2 million new homes accessible for growth in the nexfibre area, a significant opportunity still exists. Overall, the UK postpaid market remains somewhat subdued; VMO2 faced challenges from B2B contract port-outs, which tend to be of lower value.
However, consumer net additions improved compared to last year. Encouragingly, we observed stable O2 churn rates, and Giffgaff continues to grow despite the prevailing competitive environment with significant MVNO activity. It's notable that mobile service revenue reported by Virgin Media O2 grew in the quarter compared to the same period last year, partly due to a 2.6% rise in mobile postpaid ARPU. Turning to VodafoneZiggo, the competitive landscape remains intense, fueled by promotional offers from nearly all providers. We will delve deeper into this on the next slide, but in response, VodafoneZiggo has introduced new front book offers with simplified tiers and reduced prices of around €3 to €5, helping it align better with KPN’s pricing. We’ve already seen some positive results in churn as customers transition. Postpaid mobile additions in the Netherlands reached 29,000, driven by gains in B2B, although price competition persists in the no-frills market.
In Belgium, we maintained steady performance compared to previous quarters, with continued traction for our flanker brand in the South. For the Telenet brand, we successfully launched a WiFi campaign during the quarter, implementing a price adjustment of about 3% effective from April. The mobile market in Belgium remains competitive, characterized by an extended period of promotional activities and repriced offers from major flanker brands. In response, we have repositioned BASE to counter the launch of Digi, leading to improved performance in our flanker brand. Finally, the Irish broadband market is becoming increasingly competitive around fiber, but we are seeing lower churn rates as Virgin Media Ireland enhances its customer retention strategies. During the quarter, we have also observed our wholesale growth through Sky and Vodafone starting to offset retail losses. Let me take a moment to discuss VodafoneZiggo.
Stephen has been spearheading efforts for about six months, and one of the primary reasons Vodafone appointed him was to provide a clear assessment of the market and help identify VodafoneZiggo's genuine strengths and weaknesses, developing plans for renewed competitiveness. On Slide 6, you’ll find a brief summary of the four key strategies he and the management team will implement to regain commercial momentum in what is essentially a healthy three-company market. First, they will simplify processes, speed up decision-making, and enhance cost-efficiency, which was long overdue and will lead to significant operational savings. Second, Stephen correctly identified that the Dutch market prioritizes speed and price over technology, so now is the right time to realign our pricing structure in the front book. Third, Dutch consumers require speed, price, and quality service. For our fixed network, we are fully committed to utilizing DOCSIS 4 technology to reach speeds of 8 gigabits by the end of 2026 at a significantly lower cost than building fiber in this market.
In the interim, our existing network configuration can achieve 2 gigabits, which we plan to accelerate. Finally, the team will reinvest in VodafoneZiggo's fundamental strengths, including strong brands, popular loyalty programs, a large FMC base, and a unique sports platform. Charlie will discuss the financial implications of this strategy, but Marguerite and I endorse Stephen and the team entirely. It’s time for a reset to drive growth again. Now, moving to Slide 7, over the past year, we have increased transparency regarding our Liberty Growth portfolio. This has helped investors and analysts comprehend the nature and quality of our investments in technology, media, content, and infrastructure. This is especially vital given our portfolio's size of $3.3 billion and its current contribution to our share price of about $10 per share within an $11 stock price. Our aim with Liberty Growth is clear: we want to rotate capital out of non-core and underperforming assets and invest in higher-return businesses or strategic opportunities within Liberty Telecom.
Tactically, we plan to sell between $500 million to $750 million of assets this year and have visibility on specific deals. Our publicly listed stakes alone total $550 million. While it is premature to announce potential investments into Liberty Telecom from these proceeds, we remain active at the Liberty Growth level. As a reminder, our portfolio is heavily concentrated, with seven investments constituting nearly 75% of the $3.3 billion fair market value today. You can see those $2.5 billion in investments listed at the bottom left of Slide 8, along with the quarter-over-quarter fair market value changes, including increased investments, favorable foreign exchange impacts, and valuation rises totaling around $200 million in the last three months. Given our controlling interest in Formula E, we now consolidate this investment and look forward to providing more regular updates. Season 11 has had a fantastic start, with record audience numbers, particularly in the US, where the Mexico City race attracted an audience 80% larger than F1's Las Vegas Grand Prix.
We are headed to Monaco this weekend, and it is sold out for the doubleheader on Saturday and Sunday. To tap into this growing interest, we launched a unique and innovative first in motorsport, where we invited 11 well-known personalities from sports, technology, and entertainment to prepare like a Formula E racer and actually drive the Gen 3 EVO car during a two-day event at the Miami circuit. This content has already garnered 300 million views across social media and will be featured in a documentary later this year. We also just released a new Formula E documentary on Amazon Prime that delves behind the scenes with four drivers throughout the 2024 season. I encourage you to check it out to gain insights into the racing and the personalities in the championship. We're just 18 months away from the new Gen 4 car, which is now in testing and showcasing impressive power, speed, and performance.
Exciting developments are happening there. Lastly, let me touch on Liberty Services and our evolving corporate structure. The Ritec and Liberty Bloom platforms generate $600 million in annual revenue and positive operating free cash flow. Rather than being a burden, these platforms are pursuing growth and efficiency initiatives that create real equity value for shareholders. Each boom provides various financial and back-office services and has just launched its first marketing campaign, adding 10 new non-Liberty clients to its roster, according to Charlie. The remaining corporate costs, about $200 million annually post-management fees, are valued at around 14 times, leading to a $10 reduction in our sum of the parts valuation. This reduction in value fails to acknowledge the inherent equity value of Liberty Bloom and Ritec and puts us at a disadvantage compared to other sectors like media and private equity, and even against some of our telecom peers.
We’ll continue to advocate for this with analysts. In the meantime, we are working on reducing these corporate costs through efficiency improvements and added revenue from Liberty Telecom, Liberty Growth, and Liberty Services. Expect more details on this in the second half of the year. Just a reminder that our corporate cash was $2.1 billion at the end of the quarter, with 60% in euros, earmarked to support the strategic plans I just outlined, including opportunistic share buybacks targeted at up to 10% of our shares by 2025. I look forward to addressing further details during the Q&A. Charlie, over to you.
Thanks, Mike. The next slide sets out a summary of the quarterly revenue and EBITDA performance in our key markets. VMO2 reported a return to revenue growth of 0.4%, excluding next fiber-related construction revenues and handset revenues in Q1. This was driven by a strong performance in consumer fixed revenues and improving momentum in the mobile service revenue segment. VodafoneZiggo reported a revenue decline of 2.6%, mainly driven by a decline in fixed revenues and lower handset sales, which was partially offset by continued growth in Ziggo Sport and B2B fixed revenues. Telenet reported a revenue increase of 2.7%, supported by higher programming revenues in the quarter and the continued benefit of the June 2024 price adjustment. In terms of Q1 adjusted EBITDA performance, VMO2 adjusted EBITDA grew 0.8%, excluding the impact of next fiber, supported by core service revenue growth and cost efficiencies.
VodafoneZiggo's adjusted EBITDA declined 8% in the quarter, impacted by the decline in the fixed business, increased do-over programming costs, and higher labor costs related to the collective labor agreement. Telenet's adjusted EBITDA grew 0.8%, supported by lower network costs and other cost control measures, which were partially offset by higher programming costs and wage inflation. The next slide provides an update on the key metrics of our capital allocation model. Starting on the top left of the slide, in Q1, we saw cash flow generation in line with our expectations. As has been the case in previous years, Q1 is typically a modest cash outflow quarter given the timing of interest payments on our debt stack and with limited cash distributions from the JVs, which tends to come in Q4. Turning to our cash walk, our consolidated cash balance sits at $2.1 billion at the end of Q1. From our closing Q4 balance, we saw modest outflows in the quarter related to investments in the Liberty Growth portfolio and the execution of our share buyback program.
Moving to Liberty Growth, the fair market value of our Liberty Growth portfolio increased by around $150 million during the quarter. This was primarily driven by the increase in dollar terms of our largely euro-denominated investments, as well as new investments in AtlasEdge and nexfibre. Finally, looking at our CapEx trends, we continue to invest in our fixed and mobile networks, and the elevated CapEx in Belgium and Ireland reflects the continued commitment to roll out fiber networks in those markets. As a reminder, I'd tell that the step-up in CapEx will support an additional 375,000 homes passed by year-end at '25 at Wyre and will also support 5G and digital CapEx at the ServCo. We expect CapEx intensity to at ServCo to decline in 2026 as we complete the major investments in the mobile network in 2025. While CapEx will also be fully debt-financed through its own CapEx facility, which means there's no equity requirement from either Liberty Global or Telenet.
Overall, we remain confident in our ability to remain in line with our capital intensity targets across the OpCo as we set out in the guidance we announced at Q4 results. Turning to our treasury update, we maintain a strong balance sheet position with our debt split equally between bank debt and bonds. Our variable bank debt is fixed using swaps, which are independent of the debt, allowing us to refinance the credit spread in our near-term maturities but also benefit from the full term of the swaps. We maintain a cost of debt of around 4% to 5%, with an average life on our debt of approximately five years. We look to manage our debt maturities so that there are no material refinancing commitments in the next three years. Following the successful refinancing of VMO2, we have now turned out all 2027 maturities, and this means we're able to remain opportunistic and flexible in our financing approach, and we intend to remain proactive in terms of pushing out existing maturities and extending the average life of our debt.
Our activity at Telenet demonstrates our ability to remain agile with a new eight-year €500 million term loan facility deployed at an attractive spread of around 300 basis points and was completed during the quarter. As a reminder, we also secured commitments for our €500 million CapEx facility Wyre beginning as a stand-alone capital structure to support the fiber rollout. Mike has already discussed the new strategic plan of VodafoneZiggo, but in the following slide, I'm going to walk through both the near-term financial implications of the plan on the 2025 guidance and also give some color on the midterm financial implications and actions that we are taking to help return the business to our four to five times long-term leverage target. Beginning with the impact on 2025 guidance, we're lowering revenue guidance from broadly stable to low single-digit decline for 2025. This is principally driven by more aggressive retention activity across the market and the flow-through of lower front book pricing and the right pricing of Ziggo base.
Adjusted EBITDA is now expected to be down mid to high single digits in 2025, impacted by this migration process. Capital intensity will remain at 20% to 22% of sales, in line with the guidance given in February. Adjusted free cash flow and shareholder distributions will be lower at a range of €200 million to €250 million versus the €300 million we previously guided to, reflecting the impact of this lower adjusted EBITDA guidance. In the midterm, we expect that the flow-through from the front book pricing will continue to impact revenue and adjusted EBITDA trends through to 2026, but with a moderating impact versus that in 2025. We believe that the series of commercial and network actions that we are taking will stabilize and then reduce the declines that we've been seeing in fixed subscriber customers. As Mike discussed, we are accelerating our DOCSIS 4 strategy in Netherlands, not only to 8 gig speeds from 2026, but also strong interim steps, including 4 gig.
We aim to do this largely within the historic CapEx envelope of VodafoneZiggo of around 900 million a year. While there will be an impact of the new strategic plan in 2025 and 2026, we're aiming to position the business to deliver a return to growth in the midterm, probably around 2027, whilst maintaining a broadly stable free cash flow profile through this transition period. Lastly, on leverage. Given the short-term pressure on adjusted EBITDA, we anticipate leverage will peak in 2026 and reduce thereafter. Accelerating non-core asset sales, starting with VodafoneZiggo's tower assets, we will use the proceeds of these sales to pay down debt. Turning to our guidance for all our assets. I mean just talk through the updates of VodafoneZiggo, we are reconfirming all the remaining guidance metrics of VMO2, Telenet, Liberty Services and Corporate.
Questions and answers
The question-and-answer session will be conducted electronically. Our first question will come from Carl Murdock-Smith with Citigroup. Your line is open.
That's brilliant. Thank you very much. I wanted to ask on the U.K. net adds, and specifically the commentary around the broadband additions and tough market conditions. I was wondering if you could provide a bit more color on that topic. I mean, you talked about one touch switching. You talked about market competition, AltNets, and also, I guess, price rise impact as well. Could you provide some more color in terms of how much you assign to each one? And I suppose you're talking about one-touch switching is interesting given that it was also in place last quarter, but we didn't seem to see the same impact last quarter. So what are you seeing through the quarter as well? Thank you.
Yes. Thanks, Carl. Look, we're not going to get into much more detail and breaking it down between One Touch Switch and other factors. But Lutz, why don't you try to address what you're comfortable sharing, and we'll go from there.
Can you hear me? Yes. Sorry. So, Carl, thank you for your question. What is actually happening is that, of course, quarter-over-quarter, GPLS is used more by customers, yes. So that's number one. Number two is that the market is more competitive, and you might have seen it, right? So, some competitors put up to £300 benefit on the table to get customers. So that means customers within minimum contracts can churn. This is also driven by AltNets you can expect because they are in a pretty challenging situation. The only thing they have is the networks and price, that's it. So we are impacted by that. Now, the good news is, right, we built this machine that we can target down to 60 households a retention offer with product and price. Now this machine is learning the same thing for prevention, right? We are running 100,000 campaigns with machine learning and AI at the same time. It takes time to optimize the machine from retention to prevention because the market clearly shifts because of GPLS to prevention. Two things are making me more comfortable. One is that we were able to generate fixed service revenue growth of 1.9% before price rise. The price rise impact is kicking in, in Q2. Second, we see now some slight improvements from April onwards. We don't expect that to stay because our machine will deal differently with it. Yes, I hope that gives some background.
That’s fantastic. Thanks very much.
Thank you. Our next question will go to the line of Robert Grindle with Deutsche Bank. Your line is open.
Hi guys, thanks so much. That was an exciting hour or so. The question is on The Netherlands, actually. I think it's impressive that you can do the DOCSIS upgrades within the existing CapEx envelope. Just to be clear, is there an assumption about CPE costs and take-up of the higher speeds within that CapEx envelope? Also, you said you're going to sell towers in the Netherlands to reduce debt a bit. You've said that before a few years ago, if I'm not mistaken. Is there something that's changed now between yourselves that you've got a bigger plan for the business that's unlocked this new ambition? Thank you.
On the towers, it takes time to get a towerco set up, lots of documentation and various things have to be put in place. We have a partner. We're now aligned as partners that this is a good time to go ahead and take that step, which, as you know, I’ve reviewed many of them, is complicated and takes time. We are very aligned on that, and you can figure out the value and proceeds it will create. Our intention is to use those proceeds to absolutely pay down debt, which seems like the right thing to do, especially in light of this revised guidance. On DOCSIS, look, we're committed to the strategy and the technology. The good news is we're not alone. There are 120 million homes currently being prepped and/or rolling out DOCSIS in the U.S. We're close with Charter and Comcast on every element of the network rollout, the technology, the CPE. I think our numbers, while they will continue to be refined and improved, are pretty good.
Stephen can discuss the impact that these types of speeds will have from a marketing point of view. It’s clearer to us that this is the right technology for this market, and in my opinion, it should get a little bit of a CapEx overhang off the story since I receive this question almost everywhere I go, what do you have to build fiber, won't you be building fiber, and we're just waiting for that issue to drop. We will not be building fiber in this market. DOCSIS 4 is the answer, and we think it's the right one. I don’t know if Stephen or Enrique want to add anything to that?
I think that's, as you said, that's pretty clear. We're committed to that roadmap. The question was specifically about the CapEx envelope; we feel pretty comfortable that we've got enough room in that to do what we need to do to upgrade the network.
Great to hear. Thanks, gents.
Thank you. Our next question will go to the line of Polo Tang with UBS. Your line is open.
Thanks for taking the question. It's really just to focus a bit more in terms of VodafoneZiggo. I'd just be interested in terms of any commentary from Stephen van Rooyen in terms of what he's doing differently since he's taken over. Any first impressions but also be specifically interested in terms of the customer response to the €5 price cut in broadband. Has this resulted in any improvement in net adds for Q2? Given the weakening EBITDA trends and with leverage at VodafoneZiggo at six times, does it make sense to continue upstreaming a dividend to shareholders? Is cutting the dividend not the faster way to deleverage VodafoneZiggo? Thanks.
On the last one first, and I’ll hand over to Stephen on the dividend to shareholders. That's our current guidance. We’ll evaluate that as the year goes on. We think the tower proceeds as well as other non-core asset sales, which we have, are working on to be sufficient to delever the business where it once was, especially given the strategy we're undertaking and the mid-term growth prospects we see. So we'll evaluate that, Polo, as the year goes on, but that is our current position.
Thanks for the question, Polo. I think your cheat sheet is on page 6. So if you want to know what I've been doing, my time in your office, it's pretty much outlined on the page: four big blocks, fixing the organization, fixing how the organization operates, looking at overdue cost savings that we plan to deliver this year through 2027. I think necessarily, we've moved to realign our pricing. Our pricing was out of kilter with the marketplace. One of the biggest purchase reasons is price; the biggest reason for leaving is price. So you need to sort that out. We've done that now, and we did that in Q1. As we said in the financials, you will feel that effect now and throughout the rest of the year. This is the right thing to do because at the heart of what two and three are all about is arresting the decline and stopping the de-scaling. We're embracing three different brands that operate in three different market segments: the value end, and then you've got premium mobile and premium broadband, and we're making sure they're positioned well, investing behind them to ensure they take share in those markets.
As Mike said, taking the risk off the table, and the overhang on what the right thing to do with the network is, I’m highly convinced we have conviction that pursuing the DOCSIS upgrade path and giving us the speeds we need in that marketplace is the right thing for us to do. We have differentiators: strong loyalty plans, and I see a lot of upside to push that harder and further into the base than where we are today. The plan now is to commit to that, roll up the sleeves, align the team, and deliver.
Thanks.
Thank you. Our next question will go to the line of Steve Malcolm with Redburn. Your line is open.
Yeah. Thanks, guys. I have a couple related to VodafoneZiggo again. Just on the CapEx, can you give us an idea where the savings are to fund the DOCSIS 4 rollout? You're saying a sort of stable $900 million - so what's coming out to fund that? And also, how long until you get the whole network upgrade? A rough idea of the time frame would be great to hear that. On OpEx savings—clearly part of the EBITDA downdraft is Champions League. Stephen, you come from a rich content environment at Sky. I can't give a single telco that's made money out of champion league rights. Do you need to own something or give up to improve EBITDA in a couple of years' time? Thanks a lot.
Three questions in there. Thanks for the questions. Let me deal with the last one first. It's too early to call what our plan with UEFA is. You'll notice I made an intervention upon joining about monetizing it more and better. I expect that there's more opportunity for me there. In the mix for the moment and for Ziggo Sport, it's a distinctive and valuable part of the brand and proposition. So I'm pretty happy with that. On the CapEx, we're getting through the bulk of the mobile network upgrade plan, so money should free up from that part of the network envelope to move across to this. We're also through and going through a part of our IT and IT infrastructure. So that should start providing some dividends, allowing us to reinvest money in the network upgrade and stay within the envelope that we've guided. In terms of rolling out the network, I'm not going to give you specifics, but as we've said in this presentation, we see our way through to getting 2 gig, 4 gig, and 8 gig in parts of the country over the next 18 months, which considering where we were and the overhang on us building fiber is a rapid deployment and an important deployment in specific areas of the country where we think it will make a difference. Between that, fixing the network within the envelope we've got, getting our front book pricing right, and marketing correctly, I feel pretty good about that.
There was always a little bit of DOCSIS in the original CapEx envelope to begin with. It was always our base case. We weren't talking about it as much because we didn't have the same conviction as we have right now. But there's always some DOCSIS CapEx in there, so that's helping, too.
Okay. Thanks a lot.
Thank you. The next question will go to the line of Joshua Mills with BNP Paribas. Your line is open.
Hi, guys. Thanks for the questions. I understand you probably can't give too much detail on this one. But maybe if you'd be able to provide some color on the kind of conversations you're having with Telefonica about VMO2. How do they see the asset? How do you see the assets? Is it still a priority longer-term to reduce leverage at this entity, either through asset sales or perhaps lowering the dividend payment? Just any broad brush commentary there would be very helpful as obviously a bit of see the net paused? Second, on the network strategy, in the Netherlands, I think you've been clear that you're not going to build fiber. But I think there were some comments at a conference from you, Mike, recently that you may be open to partnering with or doing deals with the AltNets long-term. Is that still something you'd be considering under the right conditions? Or do you think the DOCSIS 4 strategy you're putting in place today will be enough to provide the speeds you need across the whole footprint long term? Thanks.
Yes, Josh. On the network question, DOCSIS 4 will give us what we need long-term to be competitive. We will always remain opportunistic about other network strategies or opportunities to either accelerate our access to high speed or create value. The core plan today is, as we've described it, and we're pretty bullish about that plan. On Telefonica, we really do have a good partnership. The new leadership needs time to figure out their priorities and where to put their capital and effort, so I respect that. If I were to reverse things and develop a fresh perspective, I would also see some understanding. There are lots of options remaining in this market, and it's a positive dialogue. I think we're going to give them the time they need to figure it out.
Okay. Thanks.
Thank you. Our next question will go to the line of Ulrich Rathe with Bernstein Societe Generale Group. Your line is open.
Thanks very much. On the Netherlands, I wanted to ask, one of the arguments floating around that is the difference between staying with HFC and going to full fiber is that the operating costs on the cable option, even with the higher speeds that DOCSIS 4 offers, will be structurally higher in the long-term and that's a competitive issue. How do you think about that element of it, the higher operating costs and potential margin impact relative to competitors? If I may just put in one clarification on the U.K. net cost please. Is there a time scale to this pause? Is it something that you would expect to be talking to us again in six months or over the next two years? Or is there any sense of when this sort of pause might end? Thank you.
I think the leadership of Telefonica has suggested they'll have views on their strategic plan in the second half of this year. This will impact our strategies in the U.K., and that's probably a good time frame, H2. On the OpEx question, there are a handful of factors that drive the decision between fiber and DOCSIS: number one is the cost per premise. In the Netherlands, the cost per premise for fiber is a very small fraction compared to building roads for fiber. We can get where we need to be with a small fraction of that expense with DOCSIS. We don't get ourselves to the OpEx efficiency question because it's relatively small concerning the overall capital decision we are considering. I don't know if Enrique, you want to add anything?
I think that's pretty accurate. We maintain our networks in the Netherlands and in all of our operating companies at a pretty high level, with modern technology. We're confident about the operating expenses on DOCSIS, not only DOCSIS 4 but in the continuation and expansion of DOCSIS 3.1.
The other point I'll make in support of DOCSIS is that connection costs and CPE issues are equally important in any fiber decision. We believe the ability to stay with a single network here and execute against a single technology, less disruption to customers is another benefit.
Very clear. Thank you. Sorry for butting in there.
Thank you. Our next question will go to the line of Matthew Harrigan with the Benchmark Company. Your line is open.
Thank you. Two questions: one on Formula E and then on 5G, both consumer business services. When Liberty bought Formula One, it was pretty apparent some of the practices under Ecclestone weren't optimal on social media, promotion, sponsorship, etc.—imbalances with Ferrari and between the structure of the teams. What do you think the missteps have been? And what can you do to elicit more interest and enhance the team values? Also, how do you assess Formula E’s competitive position relative to Formula 1 in terms of long-term potential?
On the 5G point, there are two versions of 5G. Almost everybody, with the exception of a handful of operators, operates under the less robust version of that. The second version of 5G SA is in our sights. We're all working towards getting our networks to GSA stand-alone 5G, which has many operating benefits. I will tell you that almost every operator agrees the main revenue benefits of 5G will be in the enterprise area. Those applications are real. We're optimistic that over time, as we all get to 5G stand-alone, which is true 5G, that will open up opportunities in the consumer space. It’s table stakes long term. As for Formula 1, it's an incredible business, and the team has done a fantastic job. While we're not going to be Formula 1 someday, what I know is there are only a handful of global championships; we are lucky to own one. We own one that's a rocket ship, and every car we bring out goes faster, and it won't be long before we're as fast as Formula 1 cars. We’re really invested in racing and excited about our potential.
Thanks, Mike. Congratulations on Sunrise; that has really worked out well.
Thanks, Matt.
Thank you. Our last question will go to the line of David Wright with Bank of America. Your line is open.
Yes, hi guys. I think we've covered Holland now. Just a question on the NetCo. Test Chairman has obviously indicated an H2 strategic review to be communicated, and then there could be some moves alongside that. But that means you kind of have to wait a little. I'm just wondering how comfortable you are waiting because one of the objectives of NetCo was to provide a vehicle to potentially consolidate the U.K. Competition is hitting you guys very hard now; the sooner consolidation comes the better. I think the general view is that the sooner consolidation comes, the better it speeds up your time to market, and you've just brought back the nexfibre targets a little bit. So, how comfortable are you sitting on the sidelines when you need to move a little quicker? On Formula E, I did notice the departure of McLaren, who prioritized Formula 1. That is a marquee brand. Was there any opportunity to keep them involved or even bring them back? That seemed like quite a big loss for the sport.
I think you're touching on the nature of the sport, which is there's flux and it's fluid. McLaren has been a great race owner for quite some time, but they're not a manufacturer, so we believe that while it's a loss, we'll be able to fill that slot with compelling owners. They can sort out their business and choose where to allocate capital. Regarding NetCo, yes, the market is evolving. It would have been potentially better to be front and center with our original plans. However, nothing prevents us from entering into strategic dialogue with operators around things like consolidation. I would say it’s a vibrant market, and I’m still optimistic.
Okay. Thanks for taking the questions, Mike.
Thank you. Our last question will go to the line of James Ratzer with New Street Research. Your line is open.
Yes, thanks very much indeed. Good afternoon, Mike. I just had one question, please. If I look at VodafoneZiggo, you've been facing some broadband customer losses there for a few quarters now, and you've now decided to react with a new strategy to reprice on the front book. I mean, if I look at the UK, you’ve just had 44,000 broadband losses this quarter. If that were to continue, do you need to consider a similar type of strategic shift on pricing in the UK as well? Thank you.
I think it's premature to address that, and I think Lutz would say — and our partners would agree that we'll be agile as the year unfolds. We're still adding customers in our nexfibre marketplace, which we think accelerates. Certainly, we’ve been growing fixed ARPU every quarter. That’s our budget for the rest of the year is to continue doing that.
Got it. Thank you very much.
I think that's time. Listen, as always, we appreciate you engaging with us and taking the time to call with us. We have lots of data and information. It's important to us that you get what you need to understand the story, the stock, and the valuation. Just know we are completely aligned and focused on our strategy. You can hold us accountable for everything on those slides because we're working on them around the clock, and we look forward to keeping you updated on that. So we'll speak to you soon. Thank you very much.
Ladies and gentlemen, this concludes Liberty Global's first quarter 2025 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.