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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 get started with our prepared remarks. After that, we’ll be happy to take your questions, where I'll involve members of our management team as needed. I’d like to remind you that we will be using slides today, which those of you on the webcast should now be able to see. If not, they are always available on our website. I'll start on Slide 3 with a few broad observations. Fifteen months ago, we outlined a strategic plan focused on creating value and delivering it to our shareholders. The tax-free spin-off of Sunrise last November was the first significant achievement from that plan, but certainly not the only one. During our year-end call a few months ago, we reviewed our progress on other strategic initiatives and discussed the steps we are taking now to create value across our core platforms: Liberty Telecom, Liberty Growth, and Liberty Services.
The key takeaway is that our team is fully committed to these goals, and we are making solid progress. This includes driving commercial momentum and upgrading our networks in competitive telecom markets, optimizing our corporate structure and service platforms, and managing capital allocation effectively, with $2.1 billion in cash and an additional $500 million to $750 million planned in asset sales this year. Let’s go through this one step at a time. Starting with Liberty Telecom on slide 4, we see substantial value creation opportunities and a clear strategy. We plan to pursue transactions or opportunities that can deliver value to shareholders in the medium term. For context, Sunrise was valued around 5.5 times EBITDA as part of Liberty Global but now trades at over 8 times EBITDA as a stand-alone company, equivalent to about $11 per Liberty share, roughly equal to our current market cap, and Sunrise accounted for only 10% of our overall EBITDA.
While we can't achieve this in every instance, there are numerous opportunities for value creation at our operating companies, which span four markets, serve 80 million connections, and generate $22 billion in total revenue and $8 billion in EBITDA. We are focused on three immediate goals for Liberty Telecom. First is financing and monetizing network infrastructure where possible. The rationale for this varies by market, but we recognize that fixed infrastructure in Europe is a valuable asset, so we are seeking to raise capital at favorable multiples, enhance network upgrades, and create strategic platforms for market rationalization. In Belgium, our NetCo initiative, known as Wyre, has fostered an exclusive wholesale relationship with Orange, enabled attractive CapEx financing for our fiber upgrade, and initiated strategic discussions with the incumbent Proximus on network sharing. In Ireland, our fiber upgrade is set to cover 80% of our footprint by year-end, improving our competitive stance and allowing us to establish wholesale agreements with both Sky and Vodafone, leading to new revenue opportunities.
In the UK, we have paused our NetCo plans at the VMO2 level to align with Telefonica's strategic review. Meanwhile, nexfibre has adjusted its plans to target 2.5 million fiber homes by year-end cumulatively. We take pride in being good partners and understand Telefonica's position, and we look forward to discussing this further as the year progresses. There are still many ways to strengthen VMO2's competitive position in the UK, with our services reaching 7 million fiber homes and record sales and net additions reported last month within the nexfibre footprint. In the Netherlands, Stephen van Rooyen has made strides on a new strategic plan, which includes a focus on DOCSIS 4 for our broadband network. This addresses any concerns regarding the need for fiber construction in the Netherlands. The second goal is to align our strategic and operational plans to foster long-term free cash flow growth while allowing for gradual deleveraging.
The Sunrise spin-off confirmed that stable free cash flow and reduced leverage drive value creation. Charlie will share more on this soon, but we are concentrating on the balance sheets of our operating companies, having refinanced all 2027 maturities in the past year. Recently, we extended €500 million of Telenet's debt at favorable rates. We recognize that leverage in some areas exceeds our targets, which is why we announced the sale of our Dutch towers with plans to allocate the proceeds towards debt reduction. Finally, it's crucial for us to maintain commercial momentum across our businesses. Competitive intensity is rising everywhere we operate, reflecting the current state of our sector. We are focused on customer acquisition through flanker brands suited to various market segments. For instance, Giffgaff complements the O2 brand in the UK, and we've introduced a broadband proposition targeting a growing customer base.
Our brand in the Netherlands has been recognized as the best mobile provider, enhancing our ability to compete in lower-market segments while expanding into Southern regions where we see strong mobile and broadband growth potential. We concentrate on base management and retention through enhancing loyalty programs for stickiness and supporting cross-selling and upselling. In the UK, AI tools are helping to optimize customer contracts and reduce churn, and we are improving our service quality with initiatives like a 25% speed increase in Holland and Check and Smile programs in Belgium. Additionally, we are refining our competitive position with updated packaging and pricing; for example, VMO2 has refreshed its mobile portfolio with better rates and multi-SIM options, and VodafoneZiggo has adjusted pricing to align with KPN. Many of these actions are setting the stage for increased reach, better sales, improved retention, higher ARPU, and enhanced service quality in the medium term.
While we observe positive developments in many markets presently, competition for broadband and mobile customers is fierce. Our Q1 subscriber and operating results on Slide 5 illustrate this trend. We noted stable broadband losses with a slight decline in the UK, along with challenges in postpaid mobile across most markets except for Holland. However, these headwinds were counterbalanced by strong fixed ARPU growth in several regions, owing to price increases and the commercial initiatives previously mentioned. Briefly touching on each market: In the UK, broadband net additions fell due to increased churn and market fluctuations, partly due to the direct switch policy and competitive offers from alternative networks. We are adapting our retention strategies while maintaining our focus on value, achieving solid fixed ARPU growth. There is significant growth potential remaining in the nexfibre footprint with over 2 million greenfield homes.
The U.K. postpaid market remains somewhat soft, with VMO2 affected by lower value B2B contract port-outs, although consumer net additions have improved year-over-year. Encouragingly, O2 churn dynamics remain stable, with Giffgaff continuing to grow despite a competitive landscape with numerous MVNO activities. Notably, mobile service revenue reported by Virgin Media O2 increased year-over-year, influenced by a 2.6% rise in mobile postpaid ARPU. At VodafoneZiggo, an intensely competitive environment persists, driven by promotional offers across providers. In response, VodafoneZiggo has launched new front book offers with simplified tiers and price reductions of €3 to €5, which have improved churn as customer migration occurs. In Holland, postpaid mobile net additions reached 29,000, driven by B2B growth. While the mobile market is generally more rational than fixed, competition remains fierce, especially in the low-cost segment.
In Belgium, we had a stable quarter compared to prior periods, with positive traction from our base flanker brand in the South. Telenet branded a successful WiFi campaign last quarter and announced a 3% price adjustment effective from April. The Belgian mobile market remains highly competitive, characterized by ongoing promotional activity and restructured offers from main flanker brands. To counter the launch of Digi, we have successfully repositioned BASE, leading to improved performance in our flanker offerings. Lastly, the Irish broadband market is heating up around fiber, though we've seen churn improve as Virgin Media Ireland enhances its customer retention efforts. Our wholesale growth via Sky and Vodafone has started to counter retail losses. Regarding VodafoneZiggo, Stephen has been at the helm for about six months, working to provide a clear assessment of the market and identify the company's true strengths and weaknesses.
On Slide 6, you will find a summary of the four key drivers he and the management team will use to revitalize commercial momentum in this essentially healthy three-player market. This involves simplifying processes, speeding up decision-making, and optimizing costs and efficiencies. This change is overdue and is expected to yield significant operational savings. Secondly, Stephen has correctly identified that the Dutch market is driven by speed and price, not just technology. With the highest ARPU in the market, it's the right moment to adjust pricing, which we have already started to do. Thirdly, as mentioned earlier, Dutch consumers prioritize speed, price, and quality of service. Our commitment to DOCSIS 4 will enhance our fixed network to offer speeds of up to 8 gigabits by the end of 2026 at a much lower cost than building fiber networks in this market, while our current network can support speeds of up to 2 gigs.
Lastly, the focus will be on reinvesting in VodafoneZiggo's core strengths, including strong brands, appealing loyalty programs, a significant FMC base, and a unique sports platform. Charlie will provide insights into the financial implications of this plan, but Marguerite and I fully support Stephen and the team. It’s time for a reset to return to growth. Turning to Slide 7, over the past year, we’ve provided greater insight into our Liberty Growth portfolio, which has helped investors understand the nature and quality of our investments in technology, media, content, and infrastructure. Given the portfolio’s size of $3.3 billion and its contribution of roughly $10 per share to our share price, this visibility is crucial. The strategy here is straightforward: we aim to rotate capital from non-core, subscale assets into higher-return businesses or strategic Liberty Telecom opportunities.
Tactically, we plan to sell between $500 million to $750 million of assets this year and have identified potential deals, with publicly listed stakes totaling $550 million. While it is too early to discuss specific investments into Liberty Telecom from these proceeds, we are actively engaged in our Liberty Growth initiatives. Our portfolio is notably concentrated, with seven investments making up nearly 75% of the $3.3 billion market value. You can see those investments listed on Slide 8, along with their quarterly changes in fair market value, amounting to roughly $200 million over the last quarter due to increased investment, favorable currency movements, and valuation increases. Given our controlling interest in Formula E, we now consolidate this investment and look forward to providing regular updates. We are thrilled with the fantastic start to Season 11, highlighted by record viewership, especially in the US, where our Mexico City race reached an audience 80% larger than the F1’s Las Vegas Grand Prix.
We are heading to Monaco this weekend, and it's sold out for the doubleheader on Saturday and Sunday. To capitalize on this growing popularity, we launched an unprecedented initiative in motorsports, bringing together 11 well-known personalities from various fields to prepare like a Formula E race and actually drive the Gen 3 EVO car during a two-day track event in Miami. This content has already generated 300 million views on social media and will be featured in a documentary later this year. Recently, we launched a new Formula E documentary on Amazon Prime that captures behind-the-scenes moments with four drivers throughout the 2024 season. I recommend checking it out for insights into the racing and the personalities involved. Furthermore, we are only 18 months away from introducing the new Gen 4 car, which is currently in testing and showcasing incredible power, speed, and performance.
Lastly, I want to address Liberty Services and our evolving corporate structure. Ritec and Liberty Bloom generate $600 million in annual revenue and positive operating free cash flow. These platforms, instead of being burdensome, are actively pursuing growth and efficiency initiatives to provide real equity value to shareholders. Liberty Bloom, as you may recall, offers a wide range of financial and back-office services and recently launched its first marketing campaign, attracting 10 new non-Liberty clients according to Charlie. Our corporate costs, amounting to about $200 million annually after management fees, are being valued at nearly 14 times, which leads to a $10 reduction in our sum of the parts. This valuation doesn’t reflect the inherent equity value of Liberty Bloom and Ritec and places us at a disadvantage compared to other sectors like media and private equity, and even some of our telecom peers.
We will continue advocating for this with analysts, while also working to reduce corporate costs through efficiencies and additional revenue from Liberty Telecom, Liberty Growth, and Liberty Services. Expect more details on this in the second half of the year. Lastly, our corporate cash totaled $2.1 billion at the end of the quarter, with 60% in euros, dedicated to supporting the strategic plans outlined earlier. This includes potential share buybacks targeted at up to 10% of our shares by 2025. I look forward to discussing this in more detail during the Q&A, and with that, I’ll turn it over to Charlie.
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 nexfibre-related construction revenues and handset revenues in Q1. And 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 nexfibre, 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. And 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. Now 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 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. Now, in general, 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 the 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 which was completed during the quarter. And 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. Now, 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. Now beginning with the impact on 2025 guidance, we're lowering revenue guidance from broadly stable to low single-digit decline for 2025.
And as Mike laid out in his remarks, 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. And 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. Now, turning to 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.
And 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. Now whilst 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. Now lastly, on leverage. Given the short-term pressure on adjusted EBITDA, we anticipate leverage will peak in 2026 and reduce thereafter. And given this increase in short-term leverage, we're accelerating non-core asset sales, starting with VodafoneZiggo's tower assets, and we will use the proceeds of these sales towards paying 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. And that concludes our prepared remarks for Q1. And I would like to hand over to the operator for Q&A.
分析師問答
The question-and-answer session will be conducted electronically. Our first question will come from the line of 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. Thank you for your question, Carl. What's actually happening is that quarter-over-quarter, GPLS is being utilized more by customers. Additionally, the market is becoming increasingly competitive. Some competitors are offering benefits of up to £300 to attract customers, allowing those on minimum contracts to switch providers. This situation is further influenced by AltNets, which are facing significant challenges and can only compete on network quality and pricing. We are indeed affected by this. However, we have developed a system that allows us to target retention offers to as few as 60 households based on product and price. We are also applying machine learning to enhance our prevention strategies. We are currently managing 100,000 campaigns utilizing AI, which requires time to shift our focus from retention to prevention due to market changes related to GPLS. There are two factors that make me feel more optimistic: first, we've recorded a 1.9% growth in fixed service revenue prior to the impact of price increases, which will begin in Q2. Second, we have noticed some slight improvements since April. While we don't expect this trend to remain consistent, our system will adapt to manage these changes effectively. I hope this provides some context.
That’s fantastic. Thanks very much.
Thank you. Our next question we'll go to the line of Robert Grindle with Deutsche Bank. Your line is open.
Hi everyone, thank you for this engaging hour. My question is about the Netherlands. I'm impressed that you can implement the DOCSIS upgrades within your current CapEx budget. To clarify, is there an assumption regarding CPE costs and the adoption of higher speeds included in that CapEx budget? Also, you mentioned plans to sell towers in the Netherlands to help reduce debt. I believe you mentioned this a few years ago, so has anything changed that led to a larger plan for the business and this newfound ambition? Thank you.
Setting up a tower company requires time, extensive documentation, and various preparations. We have a partner, and I believe we are aligned in recognizing that this is an appropriate time to take that step. As you know, reviewing many such projects is complex and time-consuming. Fortunately, we are very much in agreement on this, and you can assess the potential value and proceeds it will generate. Our intention is to use those proceeds to pay down debt, which seems like the sensible course of action, especially given the revised guidance. Regarding DOCSIS, we are committed to our strategy and the technology. The good news is that we are not alone; around 120 million homes in the U.S. are currently being prepared or rolling out DOCSIS. We are closely aligned with Charter and Comcast on every aspect of the network rollout, including technology and customer premises equipment. Our numbers, while still being refined, are looking good.
Stephen can elaborate on the marketing impact of these speeds. We are clear that this is the right technology for this market, and in my view, this will alleviate some concerns regarding capital expenditures. I frequently get asked about building fiber and when we will begin that process. I want to clarify that we will not be building fiber in this market. DOCSIS 4 is the solution, and we believe it is the right choice. Stephen or Enrique, would you like to add anything?
I think that's, as you said, that's pretty clear. We're committed to that roadmap. And 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.
Thanks, Robert.
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? And then also any first impressions but also be specifically interested in terms of the customer response to the €5 price cut in terms of broadband, has this resulted in any improvement in terms of net adds for Q2? And then just 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 delever VodafoneZiggo? Thanks.
That's a multi-faceted question. To address the last part first, I'll let Stephen discuss the dividend to shareholders. That's where we currently stand, and we will reassess it as the year progresses. We believe that proceeds from tower sales and other non-core asset divestitures will be enough to reduce our debt to previous levels, particularly in light of the strategy we're implementing and the growth opportunities we anticipate in the midterm. We will continue to evaluate this as the year unfolds, but this reflects our current stance.
Yeah. 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 where the organization operates, looking at the cost savings that I think are overdue, which 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, biggest reason for leaving is price. So you need to sort that out. You just need to cross that and you need to do it. We've done that now. We did that actually earlier in Q1. And as we said in the financials, you feel that effect of that now and you'll feel it through the rest of the year, but is the right thing to do because at the heart of what two and three are all about is arresting the decline about stopping the descaling.
That's what the strategy is designed to do. 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 making sure they're positioned pretty well, investing behind them to make sure they put a position well to take share in those markets. As Mike said, taking the risk off the table, the overhang on what the right thing to do with the network is, I'm highly convinced we have got 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. And then we've got some differentiators. We've got a loyalty plan, which I'm very excited about. I think we've only seen the tip of what we can do with that, helping offset some of the risks that we have in long tenure back book customers by investing more in there. And then as I see FMC, I see a lot of opportunity and a lot of upside to push that harder and further into the base than where we are today. And the plan now is to commit to that, is to just roll up the sleeves, align the team, the new operating model behind doing that and delivering.
Thanks.
Thank you. Our next question will go to the line of Steve Malcolm with Redburn. Steve, your line is open.
Yeah. Thanks guys. And I'll take a couple if I can related on Vodafone Ziggo again. So Stephen, I guess you're going to have to step up 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. And maybe you said it, I missed but it would be great to hear that? And just so on the OpEx savings. I'm curious that clearly, part of the EBITDA downdrafts Champions League. Stephen, you clearly come from a rich content environment in Sky. I can't give a single telco that's really made money out of Champion League rights. Is there something that you need to own or something that you would give up fairly easily to try to improve EBITDA in a couple of years' time? Thanks a lot.
Thank you for your questions. I'll address the last one first. It's still early to determine our strategy with UEFA. Upon joining, I mentioned the need to better monetize it, and we've started to see progress in that area. I believe there are more opportunities ahead. Regarding Ziggo Sport, it remains a unique and valuable part of our brand, and I'm satisfied with that aspect. As for capital expenditures, we are making good progress on the mobile network upgrade, which will free up funds for further investments. We're also improving our IT infrastructure, which should yield returns that allow us to reinvest in network upgrades while adhering to our budget. While I won't go into specifics about the rollout, we anticipate deploying 2 gig, 4 gig, and 8 gig connectivity in various regions over the next 18 months. Considering our previous challenges with fiber construction, this represents a significant and swift advancement in areas where it will have a meaningful impact. Overall, I feel positive about fixing the network within our budget, adjusting our pricing appropriately, and ensuring our brands are well-positioned and marketed effectively. Thank you for the question.
There was always a portion of DOCSIS included in the original capital expenditure plan. It has always been part of our base case. We weren't emphasizing it as much before because we didn't have the same level of confidence that we do now. However, there has always been some DOCSIS capital expenditure included, which is beneficial as well.
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 give us some color on the kind of conversations you're talking to Telefonica about on VMO2, that would be helpful. How do they see the asset? How do you see the assets? Is it still a priority longer-term that you can reduce leverage at this entity be that through asset sales or perhaps lowering the dividend payment? Just any broad brush commentary there you could give would be very helpful as obviously a bit of see the net paused? And then secondly, on the network strategy, in the Netherlands, I think you very clear that you're not going to build fiber. But I think there were some comments at a conference from yourself, Mike, recently that you may be open to partnering with or doing deals with the AltNets longer-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, on the network question, we believe that DOCSIS 4 will meet our long-term competitive needs. However, we will always be open to exploring other network strategies or opportunities to enhance our access to high-speed broadband and create value. While we're committed to our current plan, we remain optimistic about it. Regarding Telefonica, we have a solid and long-standing partnership with them. I understand that the new leadership will need time to establish their priorities and where they want to invest their capital for the greatest benefit to their shareholders. I would approach this with an understanding if our roles were reversed. There are plenty of opportunities in this market. We control 7 million fiber homes in our ecosystem and are the second-largest network in the country with 18 million homes. Our operations are progressing positively. There’s a lot to be excited about in the UK, and we will continue to explore ways to create value for our shareholders while they do the same. I have a high regard for Mark; he’s quickly grasped the essentials of our industry since entering a new sector, and we will allow them the time they need to navigate this situation. That's all I would add.
Okay. Thanks.
Thank you. Our next question will go 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 sort of arguments that is floating around on 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 this is 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 something that you would expect to be talking us again in six months or over the next two years? Or is there any sense of when this sort this pause might end? Thank you.
I think the leadership of Telefonica has, I believe, suggested that they will have views on their strategic plan in the second half of this year. So just to the extent that this will have an impact on our own strategies and opportunities in the U.K., that's probably a pretty good timeframe, H2. On the OpEx question, as I think we've mentioned many times before, there are a handful of things that drive the decision between, let's say, fiber and DOCSIS, and the number one issue is the cost is the cost per premise. And what we know that the cost per premise in the Netherlands will be a very small fraction of build for fiber. And so it almost dwarfs any potential, and I would use the word potential long-term OpEx efficiencies from consolidating networks and consuming less power and the things that fiber can provide. Cost to build, in our opinion, in the Dutch market is prohibitive, whereas we can get where we need to be with a very small fraction of that expense with DOCSIS. So we really don't even get ourselves to the OpEx efficiency question because it's relatively small in the scheme of the overall capital decision and capital allocation decisions we're looking at. I don't know if Enrique, you want to add anything that?
I think that's pretty accurate. The other thing I would just add is that we maintain our networks, our HFC networks in Netherlands and in all our operating companies at a pretty high level, pretty current technology. So we feel pretty confident about the operating expenses on DOCSIS, not only DOCSIS 4, but in the continuation and expansion of DOCSIS 3.1 as Stephen mentioned before.
The other point I want to make regarding DOCSIS is that connection costs and customer-premises equipment are equally important factors in any fiber decision. Therefore, I believe that the ability to maintain a single network and utilize a single technology while minimizing customer disruption is another advantage.
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 that other Liberty bought Formula One, it was pretty apparent in some of the practices under Ecclestone weren't optimal on social media, promotion, sponsorship, et cetera, imbalances with Ferrari and between the structure of the teams. What do you think the missteps in the past have been? And what do you think you can do to elicit more interest and enhance the team values as well because that was clearly one of the things that Liberty did right on Formula One? And how do you assess kind of the competitive position? I know, it's very different, but kind of formula relative to Formula 1 in terms of the very long-term potential? And then secondly, Mike, you've been very vocal about 5G has kind of been table stakes on the consumer side, very difficult to monetize, disappointing in the U.S. as well, whereas network slicing, you've got a lot of opportunities on the business services side. But is there anything happening with better integration of AI and the handsets, say, complexity or even like 8K or whatever makes people want to stream more on 5G mobile that would finally enable you and others to kind of benefit from the rising tide on better monetization for the European consumer? Thank you.
Thank you, Matt. Regarding 5G, most operators, except for a few, are currently using a less advanced version. We are focused on advancing to the more robust 5G standalone version, which offers numerous advantages in terms of operations and potential cost savings, and could enhance consumer experiences. However, I believe most operators would agree that the primary revenue opportunities from 5G are likely to come from the enterprise sector, where capabilities like network slicing and mobile private networks can provide significant solutions. These applications are indeed substantial. We are hopeful that as we transition to 5G standalone, genuine opportunities in the consumer market will emerge, but the real potential lies in enterprise. On the subject of 4G, Formula 1 is a tremendous success story. The team managing it has performed exceptionally well. To suggest we might reach the level of Formula 1 would be unreasonable, as it took 75 years to establish itself.
Nonetheless, we are fortunate to own a global championship, and we’ve seen tremendous growth. Every new car we release continues to improve in speed, and it won’t be long before we match the speed of Formula 1 cars on tracks like Monaco, using our own innovative approaches. My enthusiasm lies in the racing itself, witnessing faster cars and the excitement of overtakes. That’s what draws viewers to it, and that’s our investment focus. We have a strong sustainability angle and partnerships with excited sponsors and manufacturers, but we’re still in the early stages. The upside is promising without significant costs so far. We’re not trying to compete directly with Formula 1; while they excel in certain areas, we have our strengths too. Our goal is to appeal to a younger, more diverse audience and to reshape the racing landscape, and I believe we are on the right track. This environment can support both of us, so it’s not a zero-sum game. We can thrive together in this global racing arena.
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, hello everyone. I believe we've discussed Holland extensively. Now, I have a quick question about the NetCo and a brief note on Formula E. The Test Chairman has mentioned an upcoming strategic review for H2, which will be communicated soon, and there may be some developments related to that. However, this means there will be a delay. I’m curious about how comfortable you are with this waiting period because one of NetCo's primary goals was to establish a mechanism to consolidate in the U.K. The competition in the U.K. is currently very intense and affecting everyone significantly. The consensus seems to be that a quicker consolidation would be beneficial, which would also expedite your time to market. You've recently adjusted the nexfibre targets, so I'm interested to know how comfortable you feel being on the sidelines when it seems you're falling behind targets and need to accelerate. Regarding Formula E, I noticed the significant departure of McLaren, which has chosen to focus on Formula 1. That’s a prestigious brand, and I’m wondering if there were any chances to retain their involvement or potentially bring them back, as it seems like a considerable loss for the branding of the sport. Or perhaps I misunderstood the situation. Thank you.
You are highlighting the dynamic nature of the sport, which is constantly changing. McLaren has been a strong presence as a race team for a long time, but they don't manufacture engines like Porsche or Jaguar. They primarily represent a brand with a racing team. While losing McLaren is certainly significant, we believe we can find other compelling owners to fill that gap, and we are already working on this, though I can't discuss specifics at this time. Yes, it's a loss, but McLaren had to make decisions based on their own business needs, considering sponsors and financial obligations. This doesn’t mean they dislike Formula E; rather, they had to decide where to invest their resources. Some financial factors may have changed for them, prompting their decisions. Regarding the broader topic of NetCo, the market is evolving. It may have been preferable to stick closely to our initial plans, but there are still opportunities for us to engage in strategic conversations with operators about consolidation.
It's worth noting that our recent acquisition was handled by nexfibre and VMO2 without involving NetCo. We continue to maintain a substantial broadband base with a network that covers 18 million homes, of which 16 million are wholly owned. It's unlikely that significant developments in the consolidation of altnet fiber will occur without our involvement in some capacity. I believe Telefonica shares this perspective and remains open to opportunities, ready to act if necessary. We remain optimistic about a robust and active market, in which we are a key player. Although we are addressing the NetCo stake sale, we are certainly not closing off our strategic options.
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 obviously 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. And if I look at the UK, you've now just had 44,000 broadband losses this quarter. I mean if that were to continue as well, and I mean, it seemed like some of the one-touch switching effect is going to continue at least into Q2. At some point, do you need to consider a similar type of strategic shift on pricing in the UK as well? Thank you.
I think it's too early to discuss that, and I believe Lutz would agree that we will remain flexible as the year progresses. We are still bringing in customers through our nexfibre marketplace, which we expect to accelerate. This has consistently added over two million homes in new markets. We see this as a major growth driver for us. We will also keep track of the losses and implement the plans and strategies that Lutz mentioned, particularly around One Touch switch, which we are preparing to handle more effectively. Let's see how things develop. Additionally, the adjustments made in the Dutch market seem to have been necessary, especially since we have the highest ARPU there. We had struggled with retaining customers or expanding our base for some time, and we became a more vulnerable target. With Stephen's approach, we have a renewed and focused strategy for growth. Marguerite and I are confident in this direction, and we will monitor the outcomes. We remain optimistic.
Got it. Thank you very much.
I think that's time. We appreciate you taking the time to engage with us and call in. There’s a lot of data and information, and we're here to support you and answer any questions you may have. It's essential for us that you understand the story, the stock, and the valuation. You can trust that we are completely aligned and focused on our strategy. You can hold us accountable for everything on those slides because we are working on them nonstop, and we look forward to updating you on our progress. We'll talk 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.